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Master Series Stocks

I decided not shorting EDU

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at this time.

New Oriental EDU logo

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。”