Investing 102

[GregWeld]

Originally Posted by JKnight

It's worth noting that with a short, you technically have unlimited downside risk, since there's no limit to how high a stock price can go. Conversely, when you buy a stock, your downside is limited to 100% or a price that drops to $0. Clearly not for the faint of heart.

Totally correct!!! Can you imagine having a short "on" say NetFLix (NFLX) and watching it run after they announced a 7 for 1 split!!

Or shorting Amazon because you're sure Xmas is going to suck....


Shorts usually work best in "hindsight".... after you've watched the stock you knew was going to implode actually does what you thought. Handy - and fun even - as long as you're not actually placing that bet. Reminds me of the 'Bama game --- I was $100 on 'Bama by 7..... yeah had it beat with a winner coming down the last 2 minutes - and BAM! Clemson scores and kills my spread! So while I won the game - I lost the bet!! ($100 plus the 10% vig). So you could be right - and still lose! Yeah the company you shorted sucked - but then somebody else steps in and buys the company because they think they can turn it around.... or the big contract they lost - suddenly gets awarded - or the product (usually drugs) doesn't work for what it was designed for - but works great for something else.... the possibilities are as endless as your losses can be! LOL

[WSSix]

Don't forget about the story of the guy who shorted a stock late in the day. Overnight the stock went gangbusters and he owed well over $100k when the markets opened the next day. He didn't have the $100k.

[fearlessmark]

Shorting stock, or gambling in Vegas. I'll pick Vegas...