>>One short seller confessed to Koselka, "This has been the worst period in my
life. I've destroyed the net worth of my family, and I've lost a lot of money
> life. I've destroyed the net worth of my family, and I've lost a lot of money
> for my partners."<<
Guys,
I guess those TA books I read were correct. Unfortunately, I only learnt this from painful experience.(Including some losses on AMZN!!)
When starting out managing my own money, I quickly realized that Technical Analysis (TA) was the way to go. In the TA books, one of the 'rules' was to never short a stock just because it is 'too high'.
I thought this was utter nonsense.
When else should I short a stock, I would say. Intuitively, it makes sense to short 'overvalued' stocks. However, the problem with my intuitive reasoning was that we *never* know how high that stock will go.
I would be many thousand of dollars richer if I had adhered to that simple rule. One saving grace was I always put a stop, just in case the stock 'ran way' to the upside. In a few years, there will be another AMZN. If you tell traders not to short that new high-flier, they will laugh at you, but you will know from experience that they will get burnt. I guess there is something to be said for experience in this stock market.
--Olu E.
|
