Clear and Present Dangers

“Clear and Present Dangers” have become a public metaphor with various applications; mine involves the factors and substantive issues that investors have a right to … know and interpret “evidence based facts” for their own use. It is also “my” version of questioning the multiple factors in a balanced approach to investing.

In “my” view, these “balance” factors are executive compensation as a percentage of operating expenses <specifically G&A> that should be related to share price history, market capitalization as well as insider holdings. I introduce a balancing test of an investment decision process!

There was also a movie with this title … where the main character was kept in the dark by colleagues. I hope to “illuminate” who’s getting what, sharing risks and being sold short. 

Triggers: have different connotations: a signal, cue or even a prompt or a call to action. Signals and quantitative indicators of insider holdings or “skin-in-the-game” should relate to management’s ownership defining belief, motivations and ability of any sector participant’s security.

Without a Trigger, the target <investing decision> behavior will not happen. Sometimes a Trigger is an alarm < sounding>; other times, the Trigger can come from our daily routine – like … reading RegMed Investors commentary.

The Tell in any “game” is a subtle but detectable change in a player’s behavior that gives clues to that player’s assessment of an equity “position” such as … short selling.

A short sale profits from a decrease in the price of a security, borrowing<renting> the security with the expectation it will be cheaper to repurchase in the future. When the seller decides that the time is right expectation (or when the lender recalls the securities), the seller buys equivalent securities and returns them to the lender. The process relies on the fact that the securities (or the other assets being sold short) are fungible; the term "borrowing".

To be explicit, short selling (going short) is the practice of selling securities that are not currently owned  and subsequently repurchasing them ("covering").  In the event of an interim price decline, the short seller will profit, since the cost of (re)purchase will be less than the proceeds which were received upon the initial (short) sale. Conversely, the short position will be closed out at a loss in the event that the price of a shorted instrument should rise prior to repurchase. Short Position presents the expectation that the asset will fall in value and is the opposite of a "long (or long position).