To answer some questions posed by Dirtydunes and PrairieGirl.

A registered account, RRSP or TFSA cannot be levered. That is, you cannot trade on margin or borrow against holdings within either of these account types. The rules for this are federal and cover all Canadian accounts. The reasoning is that these accounts are tax deferred (RRSP) or tax free (TFSA). Since there are tax implications, you may only play with the money that you are permitted to place into these accounts. You cannot use other people's money within these accounts.

That is not to say you cannot borrow money outside of your RRSP or TFSA to place into the account.

Agreements on Margin Accounts (which can only be non-registered vs. a tax sheltered) vary among brokerages. Mine allows for margin on $5+ stock, and I'd be mighty cautious about getting in too soon. All that is needed would be a dip below $5 and I'd have a bad margin call day.

As for the specific rules pertaining to brokerage houses using your shares for loaning to shorters, I can't speak to that. And I would doubt that a person that one reaches at his/her brokerage over the phone would have a clear insight to the matter.

Personally, I believe the days of trying to score a home run (drive a company into bankruptcy) in shorting this company are behind us. Those few shares that are shorted and being played with are small potatoes. With our average trading volume at roughly 100,000 per day, that represents < 1/10 of 1% of our float. At best it keeps our SP somewhat depressed while we are waiting. When we have higher volume trading days, it is usually because there is buzz out about us and our price usually goes up.

Where the more sophisticated traders, including those that short, are taking advantage of us more conventional investors is when we have price movement. Our SP rises for whatever the reason of the day is and the geniuses over at SH expound the virtues of stop losses. Always remember, the pendulum swings too far! Our SP is deliberately being held down now so that when good news is released we will make a dramatic shot upwards. Of course some of that upshot will be "irrational exuberance."* If an inexperienced tries to lock in some of his/her gains with a stop loss, they will soon find themselves and their shares parted for far less than expected. That would be the pendulum swinging back and again it overshoots the mark. But in that swing, unsuspecting investors will be robbed.

My advice is, try not to worry about shorting, manipulation and daily price swings on low volume.

Ask yourself, and in your own mind answer the following:

1) Does the company I have bought into have an asset that is or will be highly sought after?

2) Is the management capable of furthering the project? Does it have the resources and the business capabilities to advance the enterprise?

3) Have any of the reasons I bought the company in the first place changed?

Answer those questions and you will intrinsically know when the right time comes for you to sell.

Cheers

*Alan Greenspan