Some people are not congenitally equipped to sell short. It goes against their psychological makeup.
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Most of the people who are successful in the market are basically optimists, and most of these people are very uncomfortable when they are on the short side.
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When you look carefully at the economics of shorting, it makes no sense to take the bet. The lowest price a company’s stock can go to is zero, but there’s an unlimited upside. An unleveraged short position has a maximum payoff of 2:1.
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Shorting is difficult. If you short, you are not only making an investment decision, you are making a market decision.
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The average trader is naturally a chronic bull. It is human nature to prefer optimism to pessimism.
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It takes a great deal of nerve to cling to a short position in a stock in the face of an advancing market even though the stock may clearly be overvalued.
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Short sellers are the market’s police officers. If short selling were to go away, the market would levitate even more than it currently does.
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