“I’m no tax expert,” writes Darren, “but I thought shorting stock did not allow you to declare capital losses. Am I confused by the fact that you have to pay ordinary income tax when making a capital gain as a result of shorting?”

Yes, you are confused. Any gains or losses you realize when you close out a short sale (by “covering your short”) are reported as short-term capital gains or losses. You could have held this short position for 30 years, but when you cover it (by buying back and returning to their rightful owner the shares that you borrowed and sold short), your profit is treated as a short-term gain or loss.

Speaking of short sales, some of you know I have for years been high on Amazon.com as a company but short its stock. The Internet will be great long-term for consumers, but possibly not for investors. Did you see this week’s Barron’s cover story? AMAZON.BOMB, as it was titled? The same day it came out, I found myself with a Titan of Industry who — not knowing of my interest in Amazon, or of the Barron’s cover story — offered me a wager. “I’ll bet you,” he said, “that Amazon never turns a profit.” Should he prove to be right, market historians will surely look back in amusement at the $36 billion market cap the stock sported last month, or even the $19 billion or so it commanded at the time of the Barron’s story.


“I was all set to write the Secret of Wealth, which had just come to me in a flash … but then I got so distracted waiting for the elevator, and so bemused once I eventually got IN the elevator, the Secret snuck back off into the ethos, like a dream you know you had but can’t remember.”

Or so I told you last week — evoking this (from Doug):

“That happened to me once. Of course, I couldn’t admit it as easily as you did. You should say something like ‘The Secret is too big to fit in the margins of this notebook’ and then die dramatically before anyone can ask you about it.” — Pierre de Fermat


“Amazingly,” writes Bob Price, “this isn’t another ‘beat the market in a few minutes’ email from me. Since you ignored all of THOSE, I got the hint. Check out www.moller.com/faq. Neat stuff.”

Chances are you won’t be buying, or flying, one of these cars any time soon. But — like the dream of beating the market with a few minutes’ work each week — the dream of leaping over traffic on the way to the beach never dies.


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