Let’s be honest: Kraft fat-free mayonnaise is pretty scary.

It’s not just that it doesn’t taste quite right, it’s . . . well, have you ever seen what it looks like if left uneaten for a few minutes? It crusts up into a sort of cracked plaster, and you have to wonder what the rest of it, that you did eat, is doing.

So it was with some amazement that I discovered Spectrum Naturals Lite Canola eggless mayonnaise. It has zero cholesterol and only 3 grams of fat per tablespoon compared with 11 grams for real (which is to say Hellman’s) mayonnaise, and about a third the calories. But it tastes an awful lot like mayonnaise.

I claim no magical therapeutic properties for this one. (And yes, I know that neither the Kraft brand nor this one can technically call itself ‘mayonnaise,’ and neither one does.) But if there’s a health food store near you, you might stick a carrot in it and see what you think.

And now I return you to the topic of the day: Is ‘Buy and Hold’ Old Hat?

But first . . .

Spencer Martin: ‘Re today’s column on shorting – yes, the kind of naked shorts you write about are pretty crazy. But you left out one group for whom shorting DIA’s is anything but crazy: people with 1) shorter horizons (e.g., near-retirees and above), who 2) are sitting on a portfolio that appreciated greatly over many years, and who 3) would incur big tax bites if they sold. For this group, shorting DIA’s in carefully measured quantities would be one relatively cheap form of insurance that would help to lock in those long-term gains. (Cheaper than puts today! have you seen the implied volatilities??) With ‘units’ of insurance so finely diced ($94 apiece), the truly nervous can insure themselves nearly fully, the partly nervous can insure partially, and so on.’

☞ Good point. There is a difference between shorting stocks in hope of a profit and shorting them as a way to hedge bets you’ve already placed. If the market tanks, your holdings will tank, too; but you’ll make up some of the loss with your shorts. If the market zooms, you’ll lose money on your short sales but that’s OK – the long-held stock positions you didn’t want to part with are doubtless worth more, too. Nifty.

The problem comes when this nice theory is tested in real life. Say you have $300,000 in the market and you short 3,000 shares of DIA, which is the rough equivalent dollar amount. And say there is a ‘flight to quality,’ meaning that the $300,000 of somewhat dicier stocks you own go down 20%, while the Dow Jones Industrial Average you have shorted goes up 10%. Now what do you do? Hang on? Take your loss on the short sale? Or say both go up 30%. Do you take your loss on the short position and hang on to your longs? What if the market then tanks? In theory, you’d just hold on; but in real life it could make you a little nervous.

I’m not saying Spencer is wrong; he’s not. There is a place for this kind of hedging, much as he has described. But it’s still something to think through carefully before you pull the trigger.

And now . . . Is Buy and Hold Old Hat?

Or wait. Let’s do that Monday.

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