If I buy stock I think will go up and short stock I think will go down, and if both of those things happen, won't I be in the same place I started at?

If I have $2,000 and buy $1,000 of stock to hold and $1,000 to short, and if they both go their own ways at 10% (my hold stock is $1,100 and short stock is $900), I still have $2,000.

What's the point in doing that?

If both stocks dive at 10%, the $100 I lost on my hold stock is paid back by the $100 I made on the short stock. And vice versa when the stock goes up. I am no better - or worse - off.

Wouldn't it be better to buy "loss insurance" so if your "buy and hold" stock goes down, you get $X back instead of wearing the loss and trying to make up for it on another stock? Just use some of the money you would have used to short stock to buy your "insurance."

Michael Ross