Comments on: What is ‘Shorting’ a Stock?

By: John

John — Sun, 06 Apr 2008 15:22:08 +0000

Have you ever shorted a stock?

By: Luke

Luke — Fri, 15 Feb 2008 05:45:40 +0000

Thanks Early, do you play that game?

By: tracy ho

tracy ho — Thu, 14 Feb 2008 08:04:33 +0000

Great to know that,

Tracy Ho
wisdomgettingloaded

By: mbhunter

mbhunter — Thu, 14 Feb 2008 06:03:19 +0000

When the MSM starts talking about the best short funds, the bottom is near and it’s time to buy.

By: Early Retirement Extreme

Early Retirement Extreme — Thu, 14 Feb 2008 03:57:37 +0000

You need a margin account to play this game. Also, if the stock pays dividends while you’re shorting it, you have to pay the dividends to the broker you borrow it from.

@luke – you need an upgrade. It’s not hard to get. You would be buying naked put options or selling call options. I imagine that if you wanted to sell naked call option you would need to post some serious margin since it’s like leveraged shorting.

By: Luke

Luke — Wed, 13 Feb 2008 18:16:53 +0000

If you want to limit your risk and SHORT you buy options…the OPTION to sell the stock back at a set price. The most you can lose is the cost of the options (I still haven’t done it yet but am interested). The main problem is I think you need a special upgraded account to trade options. Which is why I bought QID, like mentioned in comment#5, it’s a nice little ETF any stock trading account can buy that shorts the NASDAQ for you.

By: ChristianPF

ChristianPF — Wed, 13 Feb 2008 18:14:20 +0000

Overall, it is a dangerous venture… The stock market has averaged about a 10% increase over the last 100 years, so the odds are already stacked against you right out of the gates. Sometimes, it can seem easy to pick when a company is doing something wrong, but there can be large consequences if you are incorrect. As you mention, the downside potential is not limited.

By: DD

DD — Wed, 13 Feb 2008 17:52:07 +0000

You can also buy super short ETFs to hedge a portfolio. They are much easier and cheaper than shorting a bunch of stocks (i.e. you don’t have to have a margin account, etc.). Check out: http://www.proshares.com/funds

By: Fiscal Musings

Fiscal Musings — Wed, 13 Feb 2008 16:48:30 +0000

A great concise explanation of the concept. I haven’t tried it yet, but I’m sure I will at some point.

By: Ron@TheWisdomJournal

Ron@TheWisdomJournal — Wed, 13 Feb 2008 16:38:29 +0000

Or—

You could just short every stock I buy. Then you’re sure to make a fortune.

By: Saving Freak

Saving Freak — Wed, 13 Feb 2008 15:56:55 +0000

This is an interesting idea but why try to beat the market when you can just use the market to make money. The market is down, that means everything is on sale!

By: Lynn

Lynn — Wed, 13 Feb 2008 14:17:57 +0000

Losing money on the short side of a trade is more difficult than one may think. Take a paper position of say $10,000. Trade only on the short side for, lets say 1 month. You will see how difficult it is to lose all your money. The point in this excerise is to try and lose all the money. It will teach a great lesson about investing the long side.