In the last two days the US markets plummeted – yesterday by 1.5% on average.
But my US portfolio value actually rose marginally on the day, as the value of the 2 stocks I am short (EQR, MSFT) fell by more than the fall in value of the 2 stocks I am long (AAPL, EBAY).
My portfolio is a bet that AAPL will outperform MSFT and EBAY will outperform EQR. From my average purchase price, EBAY is up 16%, EQR down 24%. What a pity I sold some EQR for about 16% gain 2 days back.
Moreover AAPL is up an amazing 51%, but MSFT is up 3.1%. That’s a small loss on MSFT to me, but overall a big gain. What a pity I sold twice as much MSFT as I purchase AAPL.
In New Zealand it is not possible to cleanly and easily construct such a portfolio. To me a market without the ability to short is not a market, as you cannot bet both ways, which means lousy stocks don’t get culled.
Lance Wiggs 