Paul, I agree with you that shorting is not for most people. Aside from the reasons that I have previously posted that most people are shorting entirely the wrong stocks at the wrong times and are only lucky to make money - since most stocks shorted are merely overvalued stocks, not busted stocks with busted fundamentals - there are two other important reasons.
There is plenty of opportunity to make a fortune by being long the right stocks. Finding the right ones is difficult and more than a full time job, for people who by and large have day jobs. Shorting is a distraction from finding stocks that can double and triple. I own 4 tech stocks that have doubled in the last 3 months, that I watch like a hawk. Why should I spent one minute looking for something that has far less than 100% potential over even a medium time frame? I don't.
In my opinion, shorting is not a solution for underperforming value investors. Tinkering with your stock selection process is, to include
additional value criteria. Every one of the 4 stocks I alluded to above was bought for value considerations, including new mgmt, low PSR, and participation in a dynamic new industry that was given away for nothing in the price. All four had new mgmt over the last year or two plus low PSR, one had the new technology participation being given away for nothing. (All had visible blemishes which are shrinking under the new mgmt).
By the way, I do not limit myself to tech stocks at all. As you folks know I was a strong proponent of NH and COO at low prices earlier in the year. |
