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The Secret to Fast Profits

The Oxford Club

In a Falling Market:
105 W. Monument St.
Baltimore, MD 21201 The Fine Art of Short Selling

White Paper • Vol. 0305 • Series: K • No. 41

Table Of Contents
The Secret to Fast Profits in a Falling Market:
The Fine Art of Short Selling
Introduction ................................................................................................................i

What Stock Market History Tells Us ......................................................................1

You Can Be Different – You Can Be Making Grand Profits Even

When the Market Suffers ........................................................................................1

How to Profit from Plummeting Stocks ................................................................2

The Secret Alex Explained That Day ....................................................................2

The Wall Street Sin of Omission ............................................................................2

Beat the Wall Street Insiders at Their Own Game..............................................3

The Secret to Fast Profits ........................................................................................4

Copyright 2005, The Oxford Club, LLC, 105 W. Monument Street, Baltimore, MD 21201. Why Short Selling Is a Safe Part of Our Profit Strategy ....................................5
Phone: 410.223.2643.
All rights reserved. No part of this report may be reproduced or placed on any electronic medium So Why Sell Short ....................................................................................................5
without written permission from the publisher. Information contained herein is obtained from
sources believed to be reliable, but its accuracy cannot be guaranteed. Short Selling Made Simple – Investing in Reverse ............................................7
The Oxford Club provides its members with unique opportunities to build and protect wealth, globally, under all market
Two Important Considerations When Short Selling ..........................................7
conditions. The executive staff, research department and editors who contribute to the Club’s recommendations are proud
of the reputation The Oxford Club has built since its inception in 1984. We believe the advice presented to its members in
our published resources and at our meetings and seminars is the best and most useful available to global investors today. What to Tell Your Broker to Short Sell Correctly ................................................8
The recommendations and analysis presented to members is for the exclusive use of members. Copying or disseminat-
ing any information published by The Oxford Club, electronic or otherwise, is strictly prohibited. Members should be aware The Potential Upside from Short Selling – Fast Profits
that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance and More Opportunities ..........................................................................................8
does not assure future results. Recommendations are subject to change at any time and so members are encouraged to
make regular use of The Oxford Insight, the members-only website, The Oxford Club’s telephone hotline and pay special And Now the Downside – Why Your Neighbor Doesn’t Sell Short ..................9
attention to “The Oxford Portfolio Review” section of the Communiqué to get the most value from our investment analysis.
The Best Short Candidates – Fundamentally Challenged Companies ..........10
You and your family are entitled to review and act on any recommendations made in this document. All Oxford Club publications Pulling the Trigger – The Easiest Way You’ll Ever Find to Profit
are protected by copyright. No part of this report may be reproduced by any means (including facsimile) without written permission from Short Selling ..................................................................................................11
from the publisher. Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be
guaranteed. The Oxford Club expressly forbids its writers from having a financial interest in any security recommended to its Why the Next 18 Months Are Going to Be Particularly Profitable
readers. All Oxford Club employees and agents must wait 24 hours after an Internet publication and 72 hours after a print
publication is mailed prior to following an initial recommendation. The Oxford Club does not act as an investment advisor nor does
for Short Sellers......................................................................................................12
it advocate the purchase or sale of any security or investment. The company, its officers, directors, employees and associated
individuals may own or have positions in recommended securities discussed in this publication and may add to or dispose of the Conclusion: Four Keys to Unlocking the Profits of Short Selling ....................14
same. Investments recommended in this publication should be made only after consulting with your investment advisor and only
after reviewing the prospectus or financial statements of the company. The Oxford Club or its affiliates do not hold positions in
unregulated securities.
Introduction The Secret to Fast Profits in a Falling Market:
The Fine Art of Short Selling
Dear Fellow Oxfordian,
What you are about to learn market – but they collapse when
This is a scary time for most investors. The U.S. is under attack and contradicts much of what you have the markets turn treacherous... like
engaged in war. The American economy is in a recession, with a been taught about investing by they have recently.
global recession a very real possibility. brokers and the mainstream media.
It’s an investment technique that will But the past two years have
And the stock market’s volatility has led everyone to question their been outlandishly profitable for
have you making decisions other
investment philosophies – especially after looking at their depleted investors who used this technique.
investors either don’t know about or
don’t understand. And, it’s not just
Get ready. You’re about to learn
Everyone, it seems, but us... That’s because we use an investment profitable; it’s ridiculously so.
how to safely make 40%, 50%,
technique as part of our overall investment strategy that provides a
That’s not the best part, even 60% profits in a matter of a
great hedge during a bear market.
however. The best part is how few weeks – and in some
But that’s not the best part. The best part is how quickly this quickly this technique works... instances a few days.
investing technique works... especially when the market is behaving especially when the market is
Let me tell you right up front –
badly. Unlike conventional “buy and hold” strategies, this investment acting shaky. Unlike conventional
this does NOT involve the use of
technique is designed to make profits in a matter of days – so you can “buy and hold” strategies (which
options, futures or any other kind
reinvest them and enjoy the miraculous wealth building power of the past two years’ market action
of risky derivative!
compounded returns. proved is more like “wish and
hope”), this system is designed to
You’re about to learn how to safely make 40%, 50%, even 60%
make profits in a matter of days so
You Can Be Different –
profits in a matter of a few weeks – without the use of options, futures
you can reinvest them and enjoy You Can Be Making Grand
or any other kind of risky derivative. Profits Even When the
the miraculous wealth-building
When you’re finished reading, you’ll understand how to make power of compound returns. Market Suffers!
profits in up and down markets, and immediately recognize what Wall As you’ll see, this technique is
If you’ve been hurt by the
Street has hidden from you for years – the awesome profit taking one part “contrarian investing,”
magnitude of the recent bear
potential of short selling. one part “short-term profiteering,”
market, you now have the
and one part “capitalizing on the
With that, I leave you to learn about The Secret to Fast Profits in a opportunity to be made whole
biggest financial conspiracy since
Falling Market: The Fine Art of Short Selling. again. And profit substantially
the breakup of Standard Oil nearly
beyond that.
Sincerely, a century ago.”
What Stock Market When you’re finished reading
History Tells Us this report, you’ll understand how
Alexander Green, Investment Director Almost any investment to make profits in up and down
technique will work well in a bull markets, and immediately

i 1
recognize what Wall Street has The Secret Alex The story begins with a very than half of 1%.
hidden from you for years. Explained That Day well known fact: There is almost
Let me put this bluntly. If you
never an official sell recommen-
When Alex gave us the names look at it from the inside – or if you
How to Profit from dation on Wall Street. Each day,
of some of his biggest winners in look at the official data – you will
Plummeting Stocks hundreds or even thousands of buy
this past couple of year’s lousy conclude that the brokerage
We first started to consider this recommend-ations are made. Sell
market environment, he listed the community is not designed to help
technique when a number of us recommendations – virtually never!
names of several companies you you profit...
attended a workshop given by The Don’t get us wrong. There are
might recognize. In fact, you may
Oxford Club’s Investment Director, times when a broker does discuss It’s designed to encourage you
hold them in your portfolio. It
Alexander Green, at The Agora selling. (Often at precisely the to buy. The more you buy, the
included Lucent, AT&T, Kmart,
Wealth Symposium a few years wrong time, we might add.) But more the brokerages makes.
Disney, Global Crossing,
ago in Las Vegas. There, he this recommendation didn’t come Individual brokers may be good or
WorldCom, and many others.
introduced a radically different from his firm’s research bad, helpful or not – but they have
approach to investing. Of course, then the hands went department. For instance, a broker one primary responsibility – to sell
up in the room. Someone blurted might say, “I think we should take you stock.
During that presentation, Alex
out, “But virtually all these stocks some profits here,” or “Let’s cut this
put some numbers on the screen If the brokerage firms are not
have plummeted!” loss now before it gets out of
that took us all by surprise. He interested in helping you, whom
hand.” But no matter how
showed exactly how he had been Alex smiled. “Exactly,” he said. do they help?
disastrous a particular company’s
earning some big short-term profits
financial results, no matter how Beat the Wall Street
using a simple technique that rang The Wall Street Sin
pathetic its business prospects, the
true just as soon as the words left of Omission Insiders at Their Own
brokerage firm itself rarely – if ever
his mouth.
We’d like to say up front that, Game
– says, “Sell this stock.”
Usually when the average at The Oxford Club, we’re not In reality, the brokerage firms’
conspiracy advocates. But when Turns out that this is not the favored clients are not you and me,
investor hears someone describing
you understand how this technique least bit unusual. According to but the very public companies
a contrarian investment technique,
works, you may feel as we do – Gretchen Morgenson of The New they recommend.
he’s skeptical... or completely
that Wall Street bankers syste- York Times, there is virtually no
turned off. But this resonated with
such thing as a sell recommen- It’s shocking but true. What
all of us immediately. As it will matically conspire against us.
dation from Wall Street analysts most big wire houses earn from
with you. They have specific knowledge they
today. And of the 8,000 you (in commissions and other
could share with us that would
Because what he told us then – recommendations made by customer fees) pales compared to
help us profit – but they don’t
and what we’re about to tell you analysts covering the what they make from the
provide it. In fact, they hide it.
now – will simply confirm what companies in the S&P 500 companies they recommend (by
you’ve learned from your own And yet these same people are Index only 29 were sells, providing “investment banking
experience with the market... but using this knowledge to make according to Zack’ s Investment services” such as IPOs, bond
never used to your advantage. themselves millions every day. Research in Chicago. That’s less issues and secondary offerings).
2 3
Yet rarely did the financial they are “neutral” on the stock. 11% profit if you can earn these powerful combination – for safety
media talk about it. At least not Or, a favorite, “reduce.” kinds of returns in a matter of days and profits – than only buying
until Wall Street’s biggest firm – when a stock sells off? stocks. But even in the strongest
Even if the company’s outlook bull markets, there are always
Merrill Lynch – was recently forced
is atrocious, Wall Street firms don’t And you can. Imagine earning
to pay a $100 million fine to the plenty of stocks going down. In
want to step out front and say, an immediate 54%, for instance,
New York Attorney General’s office. 1999 alone, with the Dow up 30%
“Sell this stock.” Because if they when a stock gets sacked at the
And why? Because their own and the Nasdaq up an astounding
do, that’s one company that opening bell. It would take five
analysts were privately referring to 86%, the vast majority of stocks,
definitely won’t use their years of average stock market
their investment recommendations almost two-thirds, actually
investment banking services. And returns to get that kind of
as “dogs,” “powder kegs” and declined. Despite the huge run-up,
who needs the advice and services performance. Yet you can profit
“pieces of junk.” 1999 was a banner year for short
of an investment bank more than a from plummeting stocks... simply...
Think about this... struggling, downtrodden company? easily... safely... and effectively.
The carnage that began in
If you’re an investment banker Bottom Line: When you need to Unfortunately, too many
March of 2000 made it even easier.
hustling out there to lock up a $10 know which stocks are troubled investors are mystified when it The Nasdaq declined 73% from its
billion bond issue for AT&T or a and headed down, Wall Street is comes to the investing technique high to a recent low. And when
$500 million secondary issue for mute. Like we said before, it’s a called “selling short.” But there is the market leaders are dropping in
UPS, do you want your firm’s silent conspiracy. And the people nothing complicated or difficult half, you can bet the lesser
research department to have a they’re conspiring against are you about it. Selling short is simply companies are really getting
‘sell’ recommendation on the and every other investor out there. acting to capitalize on falling share steamrolled.
company’s stock? Absolutely not. Here’s what they don’t want you to prices.
You wouldn’t stand for it. That’s know... Most short-term investors try to
And there are plenty of make money by shorting the big
not going to help you close the
The Secret to Fast Profits opportunities for short sellers... even companies – the market leaders.
deal. Quite the opposite. Your
in the hardiest bull markets. They figure that bad news generally
competitors will use that very fact Stocks go down faster than they
to steal the deal from you. go up. A lot faster. For example, it will affect them first – since they are
Why Short Selling Is a most widely known.
took the Nasdaq from July, 1996
The real life result: Wall Street Safe Part of Our Profit
until March, 2000 for the market to
almost never tells clients to sell Strategy This is a very bad investing
peak, but less than 12 months for it
specific stocks. At best, they will idea. At the Wealth Symposium, Alex
to drop to where it started. At this point, you might ask
write a mildly positive to put it this way: “My method is to
yourself, Why do I need to sell
ambivalent research report that History shows that stocks short the most vulnerable, problem-
will leave the average investor in a throughout the 20th century rose laden stocks I can find. Why attempt
state of inertia (which means the just over 11% a year. Yet individual First of all, we’re not the long shot when you’ve got an
stock remains unsold). In rare cases stocks routinely tumble by that suggesting that investors abandon easy layup? There are plenty of
when the outlook for the company much or more in a single day. In a stock buying recommendations. On companies with serious problems
is particularly bad they might say single hour. Why wait years for an the contrary, this is a more and vulnerable share prices.”

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Sounds simple, but still many Short positions don’t have time least, the most-troubled companies buying a stock to take advantage of
investors don’t short sell... even premiums. You can hold a short you can find. its expected rise, you might buy it
position indefinitely. They do not at $15 and then close out your
when there are compelling reasons In fact, often times, investors
expire. position by selling it at $30,
to do so. will follow the strategy of buying
making $15 a share.
Another reason to sell short is to the strongest stocks in an industry
So Why Sell Short? while simultaneously shorting the Short selling is just the
hedge your existing stock portfolio.
The answer is simply that short weakest ones. That may mean opposite. To take advantage of a
Perhaps you have a substantial
selling is a tool that can be buying Dell Computer and shorting company’s potential share price
percentage of your liquid net worth
valuable in a number of ways. Compaq. Buying Wal-Mart and decline, you might sell it short at
tied up in stocks. If the broad market
shorting Kmart. Or buying $30 a share, and then close out
For instance, you may want to declines, so will the majority of your
Southwest Airlines and shorting your position by buying it back at
speculate that a stock is likely to stocks.
Delta. $15 a share. You would make the
decline. There could be any By selling short a few stocks, same $15 a share on this short
number of reasons. You may feel And, of course, if you’re feeling
or even the market index, you sale transaction that you would
that its sales have topped out, that bearish you can short any of the
allow the potential profits in your earn on the previous transaction
earnings will fall short of foreign market indexes. If you want
short positions to offset the decline described above.
expectations, that the company to short Japan, the symbol is EWJ.
in the share prices of the stocks
has too much debt or too many Hong Kong is EWH. Switzerland is But how, you might ask, can
you own. For example, if you have
successful competitors, that its EWZ. Mexico is EWW. And so on. you sell something you don’t own?
technology stocks you can offset
industry is in a slump, or simply There are a whole list of market Well, that’s why it’s called selling
the risk here by selling short the
that the shares are overpriced. indexes you can buy or short at short. That means selling
Nasdaq 100, symbol QQQQ.
Short selling allows you to take something you don’t own. But to
advantage of these situations Or you can offset the risk in transact the sell, you must offer the
Again, the main reason that
without resorting to using options your blue chip stocks by selling shares up in the market. And you
you may want to try it is this
or other derivatives. short either the Dow, via the do that by borrowing them from
simple: It can be an awfully
publicly traded index “DIA,” or the your broker. In theory, he lends
While options can give you profitable piece to your overall
S&P 500, via that publicly traded you the shares, so you can short
leverage that a short sale cannot, investment philosophy when done
index “SPY.” Both are highly liquid sell them. Then when you buy
they have one very serious right. So, here’s how to do it right.
and easily available for brokerage them back these shares are
drawback: their time premium. firms to lend. But please consider returned to your broker, completing
Short Selling Made
That means when you buy a put this... we never recommend the transaction.
option, unless the stock falls fairly
Simple – Investing in
shorting the Dow or the S&P 500
substantially and within the indexes, unless you’re doing it as a
Reverse For that reason, it’s sometimes
relatively short time period defined hedge. These indexes consist of the Let us begin by stating that easier to think of a short transac-
by the premium, you may miss out best companies in America. We selling short is simply the tion as borrowing and then
on the profit if the stock falls after think you should be shorting just reverse of a normal stock returning... rather than selling and
the expiration of your option. the opposite – the worst or, at transaction. Ordinarily, if you’re then buying back.

6 7
Two Important shorted if the price is under, say, Again, you can use a limit up any money to take your short
Considerations When $5 or $3. They often feel that these order to stipulate your price if you positions. You can simply use your
Short Selling shares are too risky to be sold prefer, but it’s subject to the same existing equity in your brokerage
short. restrictions as when you first account as collateral. Of course,
First, by law, all short sales
borrowed the shares to sell. your broker will charge you margin
must take place in a margin
What to Tell Your Broker interest until you close out your
account. So your broker will have So, transacting a short sale is
to Short Sell Correctly position.
you open a margin account if you fairly simple. Now let’s discuss the
don’t already have one before you After you have set up a margin returns possible with short selling.
account with your broker and have And Now the Downside –
can execute a short selling
transaction. checked to be sure that you can The Potential Upside Why Your Neighbor
borrow the shares you would like From Short Selling – Doesn’t Sell Short
Second, because these trades to sell short, you then read your Faster Profits and There are risks to selling short,
are executed via a margin account, broker the order (or place it online). More Opportunities of course. The first is that,
it is not possible to sell short in an
theoretically at least, there is no
IRA, Keogh or some other qualified The exact terminology is this: “I One upside is the historical fact
limit to how high a stock can go.
retirement plan. You must sell would like to sell short 1,000 that stocks always go down faster
We say theoretical risk because
short in a non-retirement shares of XYZ at the market.” than they go up. So your profits
there’s never been a stock that
account. could come much sooner. However,
You can, of course, place a rose an infinite amount. Not even
your maximum upside in any short
So the first thing you would do “limit order” if you like, and selling trade is 100%. Or 200% if close. Yet nay-sayers will tell you
is check with your broker to see if thereby stipulate the price you’ll you’re fully margined. The reason not to sell short because there is
he has shares in his inventory to get when your order is filled. If you for this, of course, is that stocks no limit to how high a stock can
lend. A broker’s inventory includes do set a limit price, however, you cannot fall more than 100%. go, meaning that there is no limit
virtually all shares held in his will not get the order filled until Hence, that is your maximum profit to how much money you can lose.
clients’ margin accounts, so most that price is met. unless you’re using leverage (i.e.,
big, liquid stocks can be sold short What this means, of course, is
fairly easily. Also, most firms will not accept that if you’re going to be a
a “good-‘til-cancelled” order on Another upside is that the successful short seller, you must
However, not every stock is a short sale. The order generally whole market may be trending adhere to a discipline to cut your
marginable (or eligible to be traded will be canceled if unfilled at the lower at times. When that losses if a position begins to go
through a margin account). For end of the day. Then you must happens, the trend is your friend. against you.
instance, if a stock is not enter the order again the following Studies show that three-quarters of
marginable, it cannot – by A good rule of thumb is 25%.
business day. all stocks follow the broad market
definition – be sold short. That Any time a short position goes
trend. That puts the percentages
precludes most penny stocks and When you go to take profits or against you by that amount, get out
on your side during a bear market
foreign shares. And, most complete the trade, your by telling your broker to “buy to
like we’re experiencing now.
brokerage firms have their own terminology would be this: “I cover.” There will always be
restrictions on margin trading – would like to buy to cover 1,000 Still another advantage of short other short sale opportunities.
including not lending shares to be shares of XYZ at the market.” selling is that you don’t have to put Never try to rationalize that the
8 9
stock will eventually come back The Best Short Candidates (MSFT) shares down from causing its share price to rain
down. Being a successful trader – Fundamentally $120 to under $50 recently. down from over $300 a share
means having an exit discipline Challenged Companies to less than 50 cents.
• A heavy debt load, like the
and sticking to it. You can always
So let’s get down to brass kind that has driven down • Weak pricing power, as in
short a stock again if it begins
tacks. The approach most short Global Crossing, a leading the telecommunications
moving down.
selling advocates take is pure telecommunications firm, from industry, causing a former
Another risk to short selling is guesswork – they have a hunch $60 a share to the price of a “widows-and-orphans
known as a “short squeeze.” A that the overall market is going gumball. stock” like AT&T (T) to swan
short squeeze occurs when the down and short Dow stocks... or • Earnings shortfalls, like the dive from $58 a share to less
brokerage firm must return your they believe a certain sector is kind that caused Oracle than $10.
borrowed shares to the owner, overvalued, and they advocate (ORCL) to plummet from over • Mergers gone bad, like the tie
perhaps to settle trades that have shorting the leaders in that sector... $45 a share to less than $9. up between Hewlett Packard
taken place. This is a rare or they short companies that are
simply too expensive. • Lost market share, like the and Compaq (HPQ). Within
occurrence, but it can happen,
kind Wal-Mart has wrestled weeks shares of the combined
especially if a stock is somewhat
Our approach is vastly different. from Kmart (KMRT), causing companies lost more than a
thinly traded. In such an event, you
We target troubled companies: Kmart to tumble from over third of their value.
have no recourse, you must buy the
Companies that are already $40 a share into bankruptcy,
stock back regardless of whether And these are just the high-
stumbling because they’re wrought and less than $1 per share.
you are in or out of the money. profile bombs. The list could go on
with fundamental problems. The
Again, this is a fairly rare • Industry-wide image and on. Anyone who has run a
more intractable the problems, the
occurrence, but you should be problems, like the type in the business knows that there are
better we like the odds. Here are
aware of it. prison-privatization industry endless ways for things to get off
just a few of the criteria we use to
that caused Wackenhut track.
It is also important to know that exploit these opportunities:
Corrections to dive from over
short sellers are responsible for any • Corporate malfeasance, like $40 a share to less than $7. Pulling the Trigger – The
dividends paid. The reason is this. If the lawlessness at Enron
• Accounting irregularities, Easiest Way You’ll Ever
a stock pays a $1 dividend, it will (EONPQ.PK) that caused the
like the 700 acquisitions that Find to Profit from Short
open $1 lower on the ex-date (the seventh largest company in
date the dividend is paid), all things Tyco International (TYC) made Selling
the country to wind up in
being equal. That is not simply a
without disclosing them to If you’re interested in selling
bankruptcy court.
shareholders. The result? The short and would like some ideas,
windfall to short sellers. Your
• Industry overcapacity, like the stock plummeted from over you may want to consider
account will be debited $1 per
fiber-optic bubble that drove $60 a share to less than $13. subscribing to The Oxford Short
share. For this reason, it is often
down JDS Uniphase (JDSU) and Alert, a trading service run by
wise to avoid high-dividend-paying • Perceptions of potential
Lucent (LU) over 98%. Alexander Green dedicated to
stocks unless the fundamentals are fraud or abuse, like the audit
truly atrocious, or perhaps the • Antitrust problems, like the cloud that has hovered over uncovering companies that are ripe
dividend itself is in jeopardy. kind that has driven Microsoft MicroStrategy, Inc. (MSTR), to tumble. (For more information

10 11
visit the “Short Alert” section of Just months after Alex began remarkable 20%+ average return And now in addition to a long
The Oxford Club’s website: this service, it scored time and in little more than six weeks, on and expensive war against again. Take a look at the chart the average. terrorism, we have to factor in war
below for yourself. There’s a list of in the Middle East.
Quickly though, here’s what That’s how fast and significant
just some of the stocks Alex
you should know about this short short-selling profits can be. But Together, these events are
recommended shorting in the first
selling system... don’t worry if you’ve never sold destroying the expected budget
few months of his service’s
short before. surplus. This hasn’t happened
Each week, Alex combs existence – and the profits we
through hundreds of stocks, using a captured in a matter of weeks!
When you sign up for The
sophisticated combination of Oxford Short Alert we’ll go over an There are no historical parallels
If you shorted just $10,000 of
technical charts, fundamental easy-to-follow checklist. You’ll to draw from. This is not a
each of these stocks, you would be
analysis, short-term earnings know exactly what you need to do comforting thought for folks
up an average of $3,360 on each
estimates, and insider information to begin selling short immediately. without short positions.
one of them. But that’s not the best
from his network of Wall Street and
part. This 39.2% return was As we’ve explained, short
business contacts to select the tiny And the instructions will be
generated in an average of just 63 selling works in all market
handful of stocks that appear to crystal clear. Each alert will not
days! environments. And since there are
him to be precariously perched. only detail exactly what we’re
always troubles developing at
Most recently, over a five- selling short and why, but will
Alex also spends each day various companies, it’s likely that
month period last year from March include explicit instructions you
watching the markets, looking to the next 18 months are going to be
2002 to October 2002, Alex can read to your broker or enter
ferret out the one company in a particularly profitable, especially
recorded a remarkable win streak, into your online account, including
thousand that offers the greatest when you consider the following:
nailing down troubled company stop loss orders to protect your
shorting opportunity. Then he profits... and your principal. And
after troubled company. 1. Despite the magnitude of the
alerts subscribers. And the there has never been a better time recent market decline,
service’s performance tells the rest Specifically, 16 of 18 picks to start short selling than now... valuation measures like
of the story... were profitable, earning a
earnings ratios and prices to
Why the Next 18 Months book value are still near
Recommended Closing
Are Going to Be Particu- record highs. Dividend yields
Stock Price Price
larly Profitable for Short are negligible.
Louisiana Pacific $12.55 $11.00 12.3% 2. Fed Chairman Alan Greenspan
Novellus $47.90 $29.00 39.4% We are experiencing a truly is not interested in saving the
UnitedGlobalCom $14.33 $12.56 12.4% perilous economic period. The market. He never believed in
Click Commerce $10.70 $7.25 32.3% world economy is in recession. The the “irrational exuberance” $7.04 $4.00 43.2% U.S. consumer is swimming in a to begin with and is more
SeeBeyond $7.23 $1.87 74.1% mountain of debt. Stock valuations, interested in non-inflationary
Seattle Genetics $5.10 $4.00 21.6%
even after the past two years’ free economic growth than
fall, are still high. supporting share prices.
12 13
3. Energy prices are rising. Easy 9. The trend is your friend. Over • Focus on poor fundamentals. For more information on short
money combined with the the past year, the general • Look for weak technical selling or Alexander Green’s
threat of potentially higher direction of stocks has been support (i.e., a poor chart). Oxford Short Alert, contact Member
energy costs may set off an lower... and lower Services at 410.223.2643 or toll
• Use limit orders to eliminate
inflationary spiral. Bad news free at 800.992.0205. Or visit our
Conclusion: Four Keys to surprises.
for stocks. website and click on to the
Unlocking the Profits of • Limit any losses to 25%. “Oxford Short Alert” at
4. The put-to-call ratio indicates
Short Selling Good luck and good shorting. ■
a high level of complacency.
Many more option investors That’s it then. You now have a
are betting on prices rising basic understanding of an
rather than falling. investment technique that should
be a part of every investor’s overall
5. Technology stocks, even after Return to the .html version of the Short Selling white paper report
the Nasdaq implosion, still
trade at stratospheric multiples It’s based on a secret that Wall
not seen since the biotech- Street doesn’t want you to know
nology craze in the early 90s. about.
Analysts are already calling it
And it’s quite possibly the
the “echo bubble.”
quickest way for you to score
6. The day-trading phenomenon consistent double-digit gains
was indicative of an extreme without the use of risky
market top. (Incidentally, more derivatives.
than 95% of all day-traders
never sell short. Their game is It’s called selling short.
And with a little diligence and
7. Investors have an abiding a bit of patience, you can succeed
faith that the market “always” From time to time, The Oxford Club will recommend stock investments that will not be
at selling short in virtually any
included in the VIP Trading Circle or in the Communiqué’s Portfolios. There are certain
comes back. It does. But market environment. situations where we feel a company may be an extraordinary value but may not
historically it has sometimes necessarily fit within the selection guidelines of these existing portfolios. In these
taken as long as 20 years. More importantly, you may cases, the recommendations are to be considered as speculative and should not be
never have a better chance than in considered as part of the Club’s more conservative Communiqué portfolio.
8. The “War Against Terrorism”
the market we have now.
and concerns over Iraq Also, by the time you receive this report, there is a chance that we may have exited a
recommendation previously included in a VIP or Communiqué portfolio. Occasionally,
continue to unsettle the However, when considering a
this happens because we use a disciplined “trailing stop” philosophy with our
market and are potential company to short, always keep the investments, meaning that any time a company’s share price falls 25% from its high,
sources of future instability. following four key points in mind: we sell the stock.

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