Selling short - called evil by some (the ignorant), stupid by others (perma-bulls), and a waste of time by yet others (actually some very thoughtful people).
The “Evil” and “Stupid” characterizations I pay no heed to. As a student of markets I am quite intrigued about “taking the other side” and have tested strategies to sell short. The one argument that I do respect – that it being a waste of time – I can appreciate because it is harder with the market’s natural upward bias. And even day to day, without news, the market will drift up oftentimes. Also, because losses on the short side are technically unlimited (you can only lose 100% on the long side basically), one has to take a bit of a trading approach – in others, if you’re a buy and hold investor on the long side and don’t pay much attention to charts, you would still be wise to take a different approach – a trader’s approach to the short side to control risks.
Some of the more well-known stock investors, including [Read more...]