Shorting requires timing the market. That's a very hard thing to do and routinely make money. I know there are people that make a good living from it, but it's not something for the average investor that has a full-time career outside of investing to engage in.
For the rest of us, long term buy and hold, dollar-cost averaging, diversification, and periodic re-allocation based on a target mix that accounts for risk tolerance and time horizon, are the keys to long term investing success.
Oh and btw, you can make money when the market is going down, without having to short a stock. I do it all the time. The way to do this is to continue to buy into your portfolio from savings from your bi-weekly paycheck, even when the market is going down. Then a few months later or a year later or whenever the turmoil is over, you own shares that will have risen quite nicely. Whenever everyone else is panicking, you proceed rationally and the rewards are well worth it. As Warren Buffett once quipped, long term investors love it when the market is down because it's at those times that stocks become a good value!
Owners of Cisco shares who are looking at this price decline and have a horizon of a few months have reason to worry. But if you widen your perspective to 2010, then this price looks cheap for a company that will be near or above $50B in annual revenues and $10B in annual net income, and still growing at 10%+ per year. Very cheap. I think anyone who buys now will be able to double their money in 3-4 years and that's an excellent return. |
