Comments on: 10 Reasons You Should Never Short a Stock or Index Fund

By: Matt SF

Matt SF — Sun, 06 Dec 2009 16:47:55 +0000

Very true, education is key. I certainly was not implying anything to the contrary.

But I’m not so sure that the everyday investor knows how to trade a trend (long or short) or do the chart work to make sure the trend is still in place. Most importantly, I doubt that many even know how to identify when the trend has actually been broken.

As for buying options, I think they absolutely have a place in a professional’s toolbox. However, not so sure for the Investing 101 type. I would suggest they stick with the basic concepts like fundamental analysis and portfolio re-balancing so they don’t get burned with investment products that can double in value (or more) in a single trading day or have an expiration date. Options are awesome… just not for everyone!

By: Stock Option Trading Software

Stock Option Trading Software — Sun, 06 Dec 2009 16:26:35 +0000

For the amateur investor, the best bet must be to trade with the market trends. That means sometimes you have to bet on the market going down. Maybe shorting is not the way to go for the small-time amateur investor, that's when trading put options comes into play. Of course, education is key, don't you think? .-= Stock Option Trading Software´s last blog ..Forex Options Trading – Top 2 Reasons Why Money Management is Important in Forex Trading =-.

By: Matt SF

Matt SF — Mon, 12 Oct 2009 20:19:03 +0000

@ Kaspa,

That’s true, but I would have to be pretty sure of myself to double down on a short after it’s already fallen 50%.

Thanks for commenting.

By: Kaspa

Kaspa — Mon, 12 Oct 2009 20:13:15 +0000

Actually, the upside of shorting can be more than 100% if the stock keeps going down, as you can continue shorting.

For example, every time the stock drops by 50%, you short again to double up your position.

I do agree that shorting is riskier and needs unusual skill to succeed.

By: Twitter Trackbacks for 10 Reasons You Should Never Short a Stock or Index Fund | Steadfast Finances [steadfastfinances.com] on Topsy.com

Sat, 29 Aug 2009 15:15:47 +0000

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By: Matt

Matt — Thu, 04 Jun 2009 16:17:59 +0000

Well, I chose Yin and Yang because they are opposing opposites that find a balance of existence. One can’t exist without the other right? So in relation to traders, you get a synergistic effect where each extreme allows the other to survive.

Wow, that’s way too heavy for a sleepy lunchtime comment! ; )

It’s actually very confusing why a bad stock will increase in value during a 2% rally in the broad market. There are numerous justifications why, but in relation to my index fund/ETF comment, any surge in buying (index or ETF) can make the individual stock price increase. It sort of gets dragged along in the melee. Conversely, the best stocks in the world will decrease in value on a major sell off.

BTW – Sorry for the delay in answering. I didn’t get an email notice you left a comment.

By: SJ

SJ — Wed, 03 Jun 2009 06:51:37 +0000

In parallel to 1 & 2… the potential downside is limitless ;-)

I will say I don’t think yin yang should be on that list, it assumes that each are kind of neutral? heh…

I’m kind of confused by:
“You can take the worst stock in the world, and on a day when the market is up 2% or more, you stand a good chance of losing money. Especially if that stock is included in an index or ETF.”

I don’t see how the last part comes into play… shouldn’t they stock determine the value of the index? Or are you arguing that b/c everything else goes up… by birds of the feather/attraction/etc it will also go up?