Mark Prouty

Make Money in a Flat, Volatile Market by Short Selling Leveraged ETFs

You can never make more than 100% on a short sale in your example if you short 1 million shares @ 5 or 5 million and it goes down to $1 or a value of 1 million you have made $4 on $5 of "capital" so you made 80%. Your loss is infinite.

People misunderstand that EVERY investment is path dependent, if you double your money every day for 20 years and then go down 100% in one day you are left with nothing.

11 Stocks Selling Below Cash

I looked at GNW (on the list) if you truly dig through the financials most likely the bonds may not be saved, there is a ton of leeway in calculating reserves with sill assumptions like 7% returns and mean reverting interest rates. The accounting looks better than the economics because DAC can be placed on the balance sheet and is very intangible especially given problems with hedging programs. The most likely scenario is assets (not marked at book in a HTM account) but rather taking their schedule D and obtaining true market quotes they are insolvent and could not even cover their liabilities to policy holders.

We should remember AIG was not looking for 150B in capital raise, once people accounted for them correctly the truth came out. Do you think all these level 3 assets in financials have conservative marks. If you can read the 10k and understand 70% maybe you should invest in these names. I consider my financial modelling skills above average but would need a year to model all of AIG.

On a side note, not sure the fascination with dividends and Cramer pushing this. A dividend is a return of capital, not a return on capital. The shares go down by the dividend amount (less tax arb) on ex-dividend date. It is only good if management sucks and you don't want them reinvesting earnings. Their are some favorable tax arb plays you can do especially if divs get taxed as ordinary income.

11 Stocks Selling Below Cash

you need to look at net cash by subtracting out obligations (debt, off balance sheet, etc). If you just look at P/C a company can just issue a ton of debt to increase the denominator.

Short Selling: Myths and Facts

I am an avid follower of market history, please give examples. Was Enron, Worldcom, BSC, LEH, AIG good companies. If there is worth to a company somebody will take it. Name the "good" companies.

Short Selling: Myths and Facts

The longs are willing to lend because they are paid for the borrow. Also most people unwillingly lend their shares, they sign a margin agreement with little print that allows them to short

American, that is pretty much what anaked short sale is. This is illegal and should be illegal