The (Real) Case Against Short-Selling – Why You Should Avoid Short-Selling Single Stocks

The (Real) Case Against Short-Selling - Why You Should Avoid Short-Selling Single Stocks by thelongshorttrader

I’m eating lunch right now, and writing this post primarily as a self-reminder (so I can read it to remind myself DAILY). If you’re not like me (possessing the short-selling “genetic defect”), or even if you’re like me, you should avoid short-selling single stocks. Here are some reasons (ignore what others say, written by academics/non-practicioners):

1. Your risk of blowing up, and/or experiencing crippling marked to market losses is very high, if not guaranteed. Most people (rightfully) cannot handle such volatility. Some people go insane, as a result. Insanity and poverty = bad.
2. There is no free lunch. Credit default swaps and puts have their own risks...
   

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