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Personal Finance -
Investing
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Written by Omie Ismail
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Tuesday, 10 November 2009 15:47 |
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Page 1 of 5
In the stock market, short sellers get a bad rap. They are vilified as the root of the stock market decline or the under miners of certain stocks. And while it may be true that some short sellers use dubious methods to help drive down the price of a stock, they are the vast minority. In addition, few people complain when stock prices are pumped and dumped by individuals and hedge funds with a vested interest in promoting the stock.
Being a short seller is like playing the Don't Pass line on a Craps table. You are betting that everyone else is going to lose so don't expect a red carpet treatment on Wall Street.
But short selling, or purchases of put options, are two of the few ways that you can take a bet on your market sentiment if you believe that the Dow Jones average or a particular stock has gotten out of whack with fundamentals. Lets review each so its clear what they entail.
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