For example, if most investers buy long to one stock, it will go up right? If most investers sell short to one stock, what happen to that stock? It will go down.
If the real estate stocks crash, what do you think about the real estate market? It’s the psychology and they are all related!
Do you know why the subprime crashes so hard? Some hedge funds shorted them since end of last year already, so it crashed harder. The hedge funds made a lot of profits from the crash. I read that article, but I could not find it now.
I have a BA degree in Finance, and started to invest for long time. I never short since I am happy with my return. Plus I did not have time to monitor the market! Before I invest a stock, I look at all the data, realted news and finanical statement.
I never lost money in long term because I did not buy during the .com bubble. My friends laughed at me not buying the .com stocks with 100 PE ratio. She eventally lost most of her money. The same thing I insist not buying the house now. She laughed at me again. But that’s OK. Time can tell.
Shorting is very risky if you don’t understand the theory, companies and market. I can’t guarantee and you have to make your own decision!
