Were you short stocks or long puts? I was short stocks and short calls. I don't buy options. Buying options is another fast way to the poorhouse.
Someone did a study for the SEC and discovered that 90 percent of all options expire as losses. Well, I figured out
that if 90 percent of all long option positions lose money, that meant that 90 percent of all short option positions
make money. If I want to use options to be bearish, I sell calls.
When did you cover your positions? During the week of October 19. If you remember, by that time, everybody thought that the financial structure
of America was over.
Did you cover then because we had hysteria going the other way? That is exactly right. That week was a textbook case of hysteria. Under those kind of conditions, if you are
still solvent, you have to step in there and go against it. Maybe that was going to be the one time it was the end of
the world, and I would have been wiped out too. But 95 percent of the time when you go against that kind of
hysteria, you are going to make money.
Between October 1987 and January 1988,1 didn't have any shorts. That was one of the few times in my
whole life that I didn't have any shorts. Whether I am bullish or bearish, I always try to have both long and short
positions—just in case I'm wrong. Even in the best of times, there is always somebody fouling up, and even in the
worst of times, there is somebody doing well.
Are you implying that after the collapse, you couldn't find any stocks you wanted to be short? I thought that if I were right and the world wasn't coming to an end right away, everything was going to go
up—including those stocks that I knew, fundamentally, were coming apart at the seams. In January [ 1988], I started
putting a couple of shorts back on, and even though I am losing money on one of those shorts, I am happy to do it
because I feel more comfortable having the protection of some short positions.
