Replies to post #106532 on Zeev's Turnips Patch-No Politics (ZEEV)

[Zeev Hed]

When you sell short and a stock pays a dividend, you owe that dividend to the person you borrowed the shares from, so no, that is not a fruitful tactic.

Zeev

[schloss_1]

Babylon-

A better play might be to take a long position in the leader in a field (like HD) and short the overvalued second fiddle in the same group (like LOW). Over time, although it appears at first blush that your position is 100% neutral, the industry leader (HD) will increase in value, while the wannabe (LOW) will decrease in value. This straddle will protect you very nicely from a major up or down move in the market while almost insuring you of a nice return. (Look at the graphs of the two stock and you will see HD gaining strength and LOW backing off of it's all-time high of 49.99.)

Hope this helps,
schloss_1

[Train Guy]

You certainly can if you want to as I see you've been told. If you did it in two different accounts, who would even know? Ameritrade, and maybe some other brokers, though doesn't let you in the same account.

And yes, when you are short, you get the priviledge of coughing up the dividend to the person you borrowed the shares from. It's bad enough that INTC keeps going the wrong way, but I had to shell out $20. :(