X-Message-Number: 12746
From: "John de Rivaz" <>
References: <>
Subject: Re: going short in a stock market depression
Date: Mon, 8 Nov 1999 11:54:20 -0000

There is an interesting "arrow of time" here. Investing $50 a month for two
years in a technology index or fund and going to sleep for 60 years will
earn you a fortune, but...

Even if a stock market decline were to start in a particular sector now  and
go on for 60 years there is no comparable procedure for making a similar
fortune from it. If you thought that the textiles industry would decline to
zero in 60 years (it may do if nano make it possible for people to replicate
anything from dirt as raw material), there is no mechanism by which you
could profit from this in the same way you could profit from a growing
sector.

Even if there was, there is this phenomena to consider.

An index at 30 points, for example, can theoretically rise to anything over
large timespans, 8,000 even in 60 years.

However it can fall only to zero.

If you can invest something that will track the index one way or the other,
then the potential for making money on the upside is clearly much larger.

note:

No personal criticism intended, but I do wish people would stop talking
about investing $thousands - not all of present and potential cryonics
people have got $thousands to spare. $50/month for two years may still be
beyond some people but it will surely interest a very much bigger sector of
the population. (I am just as guilty as others on this - my wife keeps on
mentioning it.)

--
Sincerely, John de Rivaz
my homepage links to Longevity Report, Fractal Report, my singles club for
people in Cornwall, music, Inventors' report, an autobio and various other
projects:       http://geocities.yahoo.com/longevityrpt

> But what is really interesting is that you can make just as much money in
> going short (betting that things will go down.).
>
> So, IF you are confident that the stock market will go down, there are
> futures on several stock market indexes that you can short.  If there is
> the biggest depression in 200 years and you position your money right  a
> few hundred thousand dollars might make you billions (you parlay your
> equity as the item moves in your direction and your equity positions
> increase).  Even a few thousand dollars might make you millions.

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