Q: What are your standards for placing a share on your short sell list, and does this in any way relate to your calling the low in the gold market?
A: Good questions. There is an inverse relationship between gold and story stock like Tesla Motors (symbol TSLA). Also, when you’re long gold, you are shorting paper currencies. The fact that the short list is now active indicates that I think we are close to the end of the bear gold market. These are the criteria for getting on the short list: a prior price rise greater than 500%, large market capitalization such that further price rises are unlikely to exceed 33%, sufficient opportunity for underwriters and insiders to exercise stock options, and a flawed business model due to government intervention such that the free market share price should in time go to zero.
Q: What is your strategy for trading a short position compared to a long on gold?
A: Never pyramid or leverage a short. Being long gold, you may do the opposite. In both situations, the result should be no margin calls.
Q: Can you elaborate on why you think TSLA’s business model is flawed?
A: David Stockman did this brilliantly a short while back (see David Stockman’s Contra Corner). He does a better job of standard economic analysis than I do. That’s why I read him.
by Arthur Fixed
[box type=”info” style=”rounded” border=”full”]Commentary from Arthur Fixed the author of the Art of Speculation during Civil War – Sun Tzu Meets Jesse Livermore is a private manuscript copyrighted 2012 by Art Fixed.[/box]
Photo credit: kevin dooley via VisualHunt / CC BY
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