This is a supply and demand game. It may seem unfair to you that a stock like KO does sell at a premium. You overlook the most obvious reason that any stock goes up in price, which is indeed DEMAND. This demand is driven by both mutual funds and KO itself. Index funds are growing fast, look at the billions invested with Vanguard alone. These funds must own KO, this is a huge demand to fill. Moreover, you make light of the share repurchase program, KO has been very big buyer, and will continue to be.
Warren, mutuals, KO, and many individual investors, are not selling, however, many buyers remain, to buy and sell a shrinking supply of KO stock.
Remember, people like you who have shorted KO, must at some point buy the stock back to cover their position. When you get caught in the short squeeze, you will no doubt wish you had picked a stock that was truely a "dog".
Shorting stocks is a very, very, risky way to make money in general. This too shall pass. |
