Day: January 17, 2008

Last Updated on January 18, 2008 by stlplace

at this time.

I was excited about shorting EDU or APPL (buying puts) after Tuesday’s MacWorld keynote and New Oriental disappointing earning news. I hoped to cover some of my loss from LFT (and to a less content CROX) by shorting the stocks, now that the market appears controlled by the bears. So I went and told my wife about the drop of New Oriental stock, broken shoes (CROX) vs. broken school (EDU) analogy, my wife said this:

“so now you are going to Du Da Xiao (a form of gamble in China), huh?”

So much for my fundamental analysis. Seriously I decided not to short the EDU due to two things:

1) In order to short a stock, I need to have Margin account. I did send the margin applications on Tuesday. But I decided to pull the application today, as I read more about it, and the story about Berkshire Hathaway stock once dropped more than 50%. Hypothetically, a person who bought BRK.A in its earning days won’t get the huge gains of BRK.A because he/she got margin call. Here is the story in Chinese. Quote here:

巴菲特2007年10月18日在接受福克斯新闻网商业频道的专访时，曾就“如何看待通过融资来购买股票或者说借钱买股票？”说：“我认为这有点疯狂。如果你看看伯克夏公司，我们买入的时候是7美圆/股，现在每股是129，000美圆。但在1974年期间，它的股价下跌了50%，2002年时，股价也从高点大跌50%。如果你的资金中有50%是通过融资获得的，则意味着你已经破产了。但你不应该因拥有一只从7美圆涨至129，000美圆的股票而破产。1987年，伯克夏的股价在两周内下跌了40%。因此，如果你通过融资来买股票，你的命运就掌握在他人的手里，这太疯狂了。”