General comments/chat, page-30679

I stay out of this normally as there is too much time spent here on analyzing every share up/down movement. Graph nearly every spec stock and you'll find a decline over last month - ADN is not doing too bad actually.

Hypothetically: I buy 3m ADN at 5c and find myself at 24c, am sitting on a 19c gain, totalling $570K. Markets are high and I'm concerned, happy wife happy life, and she wants to pay of the last of the mortgage. So I sell half for $285K profit and adding that to my income at 48.5c I know I can give half ($142.5K) to the government at tax time.

But hey, I have 3 months to go before the capital gain discount kicks in. mmm. How about I don't sell any holding, and I short 1.5M instead.

I now have exposure to 1.5M ADN, and a balance of 1.5M long offset by 1.5m short. If ADN goes up 1c, I go up 1c and down 1c at the same time - my gain is crystalised - on that 1.5M parcel my value can not drop. ADN can go to $1.00 or 0.001 cent it makes not one iota difference.

Once day after my longs hit 1 year and I am able to receive 50% CGT discount, I dispose of both 1.5m long and 1.5m short. Now (assuming price is around same level) my $285k profit gets a 50% CGT discount so instead of giving the government $142.5 I only need to give them 50% of half the gain which is only $71.25K.

This is a perfectly good example of shorting, and its smart.

What Lofty is saying is there are good reasons to short, but he also disagrees with the dirty false information smeer campaigns that we were subject to. We are largely on the same page.

If you buy a Gold coin for A$100 you want it to be worth A$150 a few years later... How does this happen? Commodity increase - maybe? No, Gold is primarily a currency so you are hedging against inflation OR the currency weaking. if AUD weakens your coin may be worth A$200. The worse AUD does themore AUD your coin is worth.

I do think we can all agree that the smeer campaigns are unwarranted and I think that is the reason shorters cop it here, and fair enough.

But shorting is a valid tool and has its place. It is actually a very dangerous practise. Today you can loose 19c on ADN (maximum), but if ADN goes to $1.00 they'd lose 81c.

Just some perspective. IN relation to the above hypothetical there are pros and cons and gotchas, so DYOR