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.

How to Turn a Profit by Buying “Bad” Companies

By Tuesday, October 1, 2013

Turn a Profit by Buying “Bad” CompaniesGroupon, 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 to the massive short-selling position on the stock. All the company needed was some good news to drive the short… Read More

Why Tracking the Heavily Shorted Stocks Makes Sense

By Wednesday, June 5, 2013

Tracking the Heavily Shorted Stocks Makes SenseWhen 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 a short selling target, it’s not always the case; this is where I see contrarian trading opportuni… Read More

How You Can Play Google in Spite of High Price

By Wednesday, January 23, 2013

How You Can Play GoogleIn 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 share, you may think the stock is expensive. On an absolute basis, a … Read More

Stock Market Breakdown: How a Correction
Would Be a Buying Opportunity

By Monday, May 7, 2012

earnings seasonI’d like to see a stock market correction so income investors could buy good dividend paying stocks at fair prices. I’m not rooting for disaster, of course, and I’m not fond of short selling. I just think that, if the stock market pulled back a normal three percent to five percent from its current level, it would make for a very good … Read More

The Best Trade in the Current
Mini Bull Market: Short Selling

By Thursday, April 5, 2012

 institutional investorsThere’s been a lot of money made in the stock market lately and it isn’t from being long. The big story this year has no doubt been large-cap, dividend paying stocks, but I have to say that some of the best speculative bets have come from short selling. All the more impressive; the short selling money is being made during a stock market … Read More