Short Selling

Short selling is the act of selling a stock first and then purchasing it at a later date. The mechanism actually involves borrowing the shares to sell and then purchasing the shares at a later point in time to give back and cover the borrowed shares. This happens automatically in the current electronic age, although there are some thinly traded stocks that are hard to borrow and therefore hard to short. You must be able to borrow shares to short them. The goal of short selling is for the price of the stock to go down. It’s the same concept as buying a stock, just in reverse. If you sold short shares at $20.00 and the price declined to $15.00, you made $5.00. Shorting technically can have unlimited losses, as the price can go up to infinity; while when buying stock, you can lose only 100% of your investment, no more, as the shares can only drop to $0.


Chinese media outlets are blaming George Soros and other foreign speculators for the recent selloff in China markets. China’s stock markets have sunk roughly 30% over the last three weeks, costing investors some $3.5 trillion in market value. Taiwan-based China Times is now…

Groupon, Inc. (NASDAQ/GRPN) is up a sizzling 368% from its 52-week low of $2.60 on November 12, 2012. Many in the market thought Groupon was dead. I was not one of them; I actually saw a possible short-covering opportunity due…

When I look at potential trading opportunities, I like to scan for stocks that have high short selling positions in them. These are the traders betting against the stock. Now, while there’s always some validity to why a stock becomes…

In my view, Google Inc. (NASDAQ/GOOG) is tops in the Internet space, and a better play than Facebook, Inc. (NASDAQ/FB) and Yahoo! Inc. (NASDAQ/YHOO), based on my stock analysis. (Read “Facebook’s Hot, But Valuation’s Questionable.”) At just over $700.00 a…

Stock picking in a market with very little tailwind makes life much more difficult compared to a bull market. This is obvious. But in any market, there are opportunities in differing market sectors. There’s always the opportunity for short-selling and…