One investor's misfortune is often another's gain, and that's been laid out on Wall Street in the last two weeks. Market shorts now have rosy cheeks.

"We have been up (in portfolio results) in both July and August," said David Ryan, president and founder of Ryan Capital Management LLC, a hedge fund in Santa Monica. "We were short on a lot of Internet stocks, such as Amazon.com, Yahoo, and Onsale (an online auctioneer of computers and peripherals)."

Internet stocks took a beating during the 500-plus-point drop in the Dow on Aug. 31, meaning nice profits for short traders.

A hedge fund is one that will either go long or short on the market, sometimes simultaneously with different investments. Ryan hints only of single-digit gains in July and August on his portfolio, but Scott Prather, a day trader working in the offices of Cornerstone Securities Corp. (formerly Westwood Securities), talks about 125 percent gains in just days.

Day traders are nervy investors who buy, short or sell stocks in thousand-share blocks, usually by trading securities hands-on, using high-speed computer terminals.

"I made $400,000 in this market, in six days," Prather said last week. "I started with $300,000. On one day I made $87,000, another day I made $90,000, another day I made $50,000 and another day I made $72,000. Those were my best days ever. But I am still mad, because I haven't had a $100,000 day yet."

Prather likes to take positions meaning short positions lately in large-cap Nasdaq stocks, such as Cisco Systems Inc., Yahoo Inc. and Dell Computer Corp. With high share prices, such stocks, on a point basis, move nicely within a single day, or even hour.

For the intrepid day trader like Prather, a one-point move in the right direction means a $1,000 profit. "I was short on 6,000 shares of Dell," said Prather. "So when Dell dropped 5 points (during last Monday's rout), I made $30,000 just like that."

The big-cap technology stocks on the Nasdaq were especially hammered in recent bear markets, yielding Prather the big gains. Of course, it should be pointed out, if the stocks had rallied, Prather would have been whacked.

Prather is looking forward to more market debacles.

"I think a 1,000-point day (drop in the Dow Jones Industrial average) is entirely possible," he said. "Many of the world's stock markets are off 50 percent to 80 percent. We are nowhere near that yet."

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