Gary:
No Skimping on the Shorting Warnings
By James J. Cramer
9/6/00 9:12 AM ET
Some of you have emailed me saying shorting is not so hard and I should knock it off with the warnings. No way. First, when the market is going up, and you are short, the pain is excruciating. Second, when you are long, things go to zero. Then they stop. When you are short, they can go to infinity. Emulex, if you were short it, was headed to infinity.
One of the things I do well here is tell the truth about what is tough and what isn't. Shorting is tough stuff. If you are not a pro and you insist on shorting, please, please do it in puts. If there are no puts, forget about it. If you are shorting right now and you don't know how borrowing works and how locating works, you are over your head and you should stop right now. Cover. Buy. Close out the position.
I am doing this to scare you. I am doing it to frighten you out of your wits so you will contain the damage that you might do to yourself. Shorting is a craft -- a different, more tricky, tougher craft than being long. Being short and being long are only mirror images of each other in the boilerplate explanations journalists use to describe what shorting is. Anybody ever caught in a squeeze knows what I am talking about. If you haven't suffered through one, glom on to my pain. And keep it vicarious. |
