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Tuesday, October 19, 2010 11:59:03 AM
I guess this is the way the Big Boys now make their money; by screwing the little guy.
I called my broker and asked if I could short stocks. They said that I could but I would have to put up $1 is cash reserve for every share sold short.
So, if I were to sell short 10000 shares of ISCR at .042 and cover at .03 I would make a total of $120. And it would cost me 19.98 in commission and I would have tied up $10,000 for the duration. It is functionally impossible for the small investor to make a reasonable ROI doing this without taking on incredible risk.
On the other hand, the Big Boys (large institutional investors) have, what is called, a "wrap agreement" for commissions, which is basically a flat fee that allows them to execute hundreds, if not thousands, of transactions, for a single flat-fee. There is simply no way any penny player can compete with that.
Call your broker and inquire about shorting as I did. And be sure to ask for a "wrap agreement" for commissions. Of course, they will deny it exists and play stupid on that subject.
VV
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