thestreet.com
I'll stick with Mr. Pink. He is far superior to the inept and sometimes criminal element that he opposes. You still did not say you whether you oppose or favor margin accounts.
But in another ironic twist, short-sellers were actually among the few traders who
propped up this week's market. Since an investor can short only a rising stock --
executing the sale on a trade higher than the previous one -- the free-falling market this
week didn't give short-sellers much of a chance. Indeed, most short-sellers were net
buyers this past week, covering their shorts. In this way, they bolstered the market.
"Short-selling, [in general] , is necessary because it creates support when the market
shows a bottom," explains Schumacher. "If there is no short interest, the market will not
have the extra support of those covering their shorts, and it will fall faster. Short-selling
keeps the market stable during times of mass selling."
Because of the complexity and risks of short-selling, however, individual investors would
do better to use the increase in short interest of certain securities as indicators not to
buy long, rather than as a chance to short sell. |
