Jeff: ‘Apparently this is a difficult stock to short. I tried shorting it in a Charles Schwab account, but they do not have the shares to short. Why is that?’

☞ By now, a lot of people have shorted this stock. To do that, they had to borrow shares to sell. Brokers now are finding it difficult to borrow more shares. The ‘longs’ (people who own the stock hoping it will go up) take this as a good thing, and in a way it is. The more shares sold short, the more eventually have to be bought back by the short-sellers – although not on any timetable.

Remember Prepaid Legal Services, the stock whose January 2007 25 LEAPS were suggested here March 18 at $11.80 when the stock was $35? One reason it seemed attractive was that 5 million shares had been sold short, and by speculators who just might panic at the first sign of good news, cover their shorts, and send the stock higher.

I don’t know how much of that happened as the stock hit $52 or so last month, more than doubling the value of our LEAPS (it’s since fallen back to $43 and change, and may be a little interesting again) . . . but there’s an important difference here.

Or at least I hope there is.

With PPD, there is an ongoing profitable business. This game could go on for years.

With NTMD, there is a business with no revenues, projected expenses of more than $100 million in the next twelve months, and a single product. It will either be a hit or it won’t. It shouldn’t take years to find out.

The longs are betting that doctors will prescribe it widely and that insurers will pay for it, even though a generic alternative is available for 85% less. (The longs are hoping that – because the alternative requires ingesting two pills instead of one – doctors and insurers will see the value in paying six times as much.)

The longs may be right, which is why shorting stock is risky and not recommended for all but really sophisticated investors. (Buying puts is risky, too. But with puts, at least you know your loss is limited to the size of your bet. You give up part of any gain because of the ‘premium’ built into the price you pay for the put; but that’s the price for being able to sleep at night, knowing your loss isn’t open-ended.)


George Hamlett: This is a follow-up article by the Eugene, Oregon, attorney who recently left the Republican ranks.’

August 7, 2005
Public split from GOP hits a nerve nationwide
By James Chaney
For The Register-Guard

In early June, I decided to leave the Republican Party after having been a registered member for 25 years. I’ve gathered since then that I’m not alone in having made that decision.

What made my departure different is that I decided to leave, for better or for worse, in a very public way.

I wrote an essay explaining my reasons for leaving – essentially, that “my” GOP had drifted so far from its traditional moorings in honesty, practicality and common sense so as to be unrecognizable to many rank-and-filers like me – and this newspaper printed it on June 26. I expected a response, but not the one I got.

In this broadband era, the reaction wasn’t just local; it was national. Through nothing more than our 21st century version of word of mouth, within three days I was getting calls, e-mails and letters from all over the country, and invitations to appear on talk radio not just in Oregon, but also in Boston and in a broadcast heard across Canada.

The experience hasn’t convinced me that what I had to say was particularly moving, original or important (mine was just a personal message from the heart that was a long time in the making), but it did show me that, at least sometimes, the Internet really works the way it’s supposed to in spreading otherwise isolated ideas very quickly, through nothing more than the desire of people to spread those ideas.

More importantly, though, the message I heard again and again was one of agreement that America faces a unique array of crucial issues that we must face with competence, honesty and integrity, and that the political discourse through which America needs to find solutions to those problems has fallen into a dysfunctional heap.

That’s not to say that my essay wasn’t the target of criticism in the vast and anonymous blog world that has sprung into being in the last couple of years.

On the far left, my basic intelligence was questioned for having ever associated with what several writers branded “the Rethuglicans” in the first place, and on the far right there were people seriously suggesting that I was a fake, a nonexistent person from “the People’s Republic of Eugene” (another direct quote) who’d been put up to it all by MoveOn.org.

But most people were thoughtful, and kind, and genuine, and as a group repeatedly came back to two questions: So now that you’re not a Republican anymore, what will you do? And as an electorate grown tired of posturing and party-line politics that don’t really address the gravely serious issues of our times, what do we do?

Answering the first question was easy, for purely pragmatic reasons.

Like it or not, ours is a two-party system. The ash heap of the dreams of the supporters of Ralph Nader, Ross Perot, John Anderson and George Wallace has grown high enough by now that the impotence of third parties in modern American politics really can’t be denied.

Third party movements have come and gone over the years, leaving no real legacy other than the occasional shaping of the debate between the candidates of the two major parties. Simply put, if you want your political voice to extend beyond the single ballot that you cast, the most effective way to do it is as a member of one of those parties.

In addition, in a state with closed primaries such as Oregon’s, unless you affiliate with one major party or the other, you lose part of the power of even that single ballot, because you have no voice in the major party primary races. As a firm believer in the notion that we should all vote whenever we can and in as many races as we can, major party affiliation is a personal must.

So for me, the Democratic Party it is; I switched my registration about a week after the piece was published.

I’m hopeful that there’s a place in the Democratic tent for a fiscal conservative who believes in a foreign policy based on strength, respect and honesty, and who favors the zealous defense of individual rights, without regard to whether that defense involves death with dignity, gun ownership, freedom of speech and worship, or sexual orientation. The Republican Party left that set of beliefs behind a long time ago, and ultimately lost any tolerance for dissent. We’ll see if the Democrats can do better.

The second question I was asked repeatedly – in this time of fiscal, environmental and geopolitical crisis, what do we do? – is more complex.

After more than two centuries of struggle and experimentation, our oddball notion of a government of, by and for a free people has finally and unequivocally prevailed.

As far back as 1630, Gov. John Winthrop of Massachusetts described the Puritan experiment in religious freedom as a city on a hill for all the world to see, either as a beacon if it succeeded or as a lesson if it failed. Abraham Lincoln echoed this thought by referring to our dream as the last best hope of Earth. Ronald Reagan gratefully borrowed both phrases in a well-known 1974 speech, concluding that we “cannot escape our destiny, nor should we try to do so.”

This message of inspiration that the existence of our free society sends every day has been resonating for 400 years, whether in the context of religious repression in colonial times, in the defining national struggle of the Civil War, or in the depths of the Cold War.

In the 20th century, the dream triumphed in a world war in which aristocracies and monarchies gave way to popular government, in a second world war in which the threat of fascism was beaten back, and in a Cold War in which the false promises of monolithic state socialism were proven to be lies. Simply put, the dream has come true.

But with our success comes an awesome set of obligations. The world is watching, and looks to us for leadership. It’s about time we started acting the role that we won through centuries of struggle.

We can’t fulfill that role through blind ideological rigidity, making our decisions on the issues of the day simply by looking to preconceived liberal/conservative, Democratic/Republican labels.

In his autobiography, Barry Goldwater praised our country as one in which vigorous debate between “men of good conscience who hold an opposite view” produced policy; one of his five rules of political campaigns was to never hesitate to criticize an opponent on points of disagreement, but to always praise an opponent if he’s right.

Somehow, we’ve lost that independence of thought, that civility of discourse, and that ability to acknowledge that the other guy has good ideas sometimes. We need to get those things back, and that’s true on all levels – national, state, local and around the office water cooler.

We can’t fulfill that role through disrespect, arrogance and dishonesty. Personal insults, abusive language, attack politics, misleading spin and out-and-out lies obviously don’t have a place in our homes and workplaces, so it’s wrong to think that they have a place in the political discourse of the greatest free country the world has ever known. It’s even greater folly to think that they represent a productive approach as between nations. Fixing the problem starts in the way in which we deal with each other, and in telling our leaders – early and often and through our words, actions and votes – that we expect the same from government and from every person in it.

Most important to us as individuals in this free society, we can’t fulfill that role without consistent hard work, good deeds and sacrifice by each of us.

To attain real fiscal discipline, we need to be honest with ourselves about living within our national means, whether that involves raising taxes, spending less money, or both. To become environmentally responsible, we need to come to grips with the fact that our national consumption of the world’s resources is grossly out of proportion with our numbers, to realize that it can’t go on forever, and to reflect those realities in our daily lives.

And on the world stage, we need to become a nation of individuals who can stand proudly as citizens of that city on the hill without regret over how we got there, without shame over how the world sees us, and without fear that, because of shortcomings which we either can’t recognize or won’t admit, our time on that hill may soon come to an end.

I, together with many of the people across the country who called and wrote in response to my essay, have great faith that we’ll come around. We always do. Just as free markets work to balance supply and demand, to set prices and to encourage innovation, our political free market has never tolerated extremes for very long – it adjusts toward the center, even if the process of adjustment lacks grace from time to time.

It’s easy to forget that the Ku Klux Klan had a moment of legitimacy in the 1920s, that international socialism was all the rage in some circles in the 1930s, and that the witch hunt mentality of McCarthyism enjoyed broad popular support in the early 1950s.

We are a decent, hard-working, compassionate people, and I’m convinced that our government will consistently reflect those qualities again. But we all have some work to do before we get there.

James Chaney is a Eugene attorney who has been in private practice for more than 20 years.

Copyright 2005 The Register-Guard


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