What do the shorts know? Investors in record numbers are betting stocks will go down not a good sign.
February 25, 2002: 4:53 p.m. ET
By Adam Lashinsky
money.cnn.com
SAN FRANCISCO (CNN/Money) - I got bullish for a few brief minutes on Monday when I saw that short interest on the New York Stock Exchange had hit record levels from mid-January to mid-February.
That's right, the idea that more and more investors were going short -- that is, betting that stocks would go down -- got me thinking that maybe enough people had finally sold out to clear the way for the long-awaited recovery.
Like I said, that was just for a few minutes.
Then I spoke to veteran short seller Marc Cohodes, a California-based investor for Rocker Capital, who reminded me that a lot of the rise in short sales could just be professional investors taking out insurance on their long positions.
As for the short interest that is attributable to genuine bearishness, well, short-sellers tend to do their homework. And if they see something, then you should be very, very afraid. Companies short sellers have targeted in the past -- long before their fall -- have included Tyco, Lernout & Hauspie and, yes, Enron. |
