| These days I think you have to short stocks in order | | | | historical data available there is no way to know |
| to come out ahead trading the stock market. Gone | | | | when or if a short seller would have been subject to |
| are the days where 8 out of 10 years the stock | | | | a forced buy-in10. |
| market would only go one way - up. Now it seems | | | | Borrowing shares Short selling a security requires |
| we have 2 good up years followed by a swift bear | | | | borrowing shares from an investor who holds them in |
| market. Massive volatility is ever present. | | | | a margin account. Not all stocks meet these criteria all |
| Shorting is simply selling high and buying low. You | | | | the time; some never meet these criteria at all. |
| profit from a falling stock price. It's the only way you | | | | There is no reliable method to determine what |
| will make profits in a bear market. | | | | stocks would have been realistically shortable in the |
| But here are some limitations and you must take this | | | | past. |
| into account | | | | Limited expectancy With respect to long term trend |
| Short Selling stocks has the following issues: | | | | following, short selling offers a severely limited |
| Forced buy-ins A short seller has to borrow shares | | | | mathematical expectancy. The price of a stock can |
| before they can short sell them. Likewise, the short | | | | only decline by a maximum of 100%. However, it can |
| seller must return (deliver) the shares should the | | | | rise by an infinite amount. This is a significant disability |
| rightful owner wish to call them back. From the | | | | to overcome. |