Beware the Grinning Bear
business2.com
Conversely, investors eyeing short activity can also spot buying opportunities after a stock has dropped if a lot of short interest has built up. Junius Peake, a finance professor at the University of Northern Colorado, compares that situation to "charging a battery," because eventually all those short-sellers will have to cover their bets, unleashing a jolt of buying.
Even a bear like Tice doesn't necessarily recommend that individuals try short-selling. "It can be pretty risky to short individual stocks," Tice says. If an individual wants to sell short, he notes that it's safer to short an index of stocks, such as the Nasdaq 100. Because an index is less volatile than an individual stock, an index short "can serve as a decent hedge," he says.
For individuals who really want to try short-selling, sellers cautions, "use a very small percentage of your portfolio." Short-selling may be a bigger factor in 2001, he says, but "it's still a hard way to make a living."
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>Shorting serves no purpose? You don't actually believe that do you? <
If you read my prior posts, I was talking about shorting has no purpose for the public company. If I owned XYZ Computers Inc, what would shorting do for my company? I took it public to raise funds, not to have it turn into a paper play. |
