Monday, December 30, 1996
Shorting Bad?
by [email protected]

Is shorting a bearish sign? Is shorting bad? I don't think so on any of these counts. Think of shorting this way: Short-sellers have signed a contract to buy a stock at the market at some point in the future! Don't you wish all investors would do that? If a company could go around and get pledges from investors to buy at some point, wouldn't that be great?

Now, I don't use short-selling. I don't feel comfortable betting against stocks. And, the numbers are stacked against you. A stock can only depreciate 100%. But it can appreciate infinitely (in theory).

In any case, I read in the Wall Street Journal that short interest is on the rise, no doubt because the market is going to crash because of all the overvaluation and froth. "Crash, market crash," the short sellers cheer. And I, too, cheer with them. "Crash so all the short sellers will cover, and that I can jump in and get some really good steals!"

A woman friend of mine just told me that she had "bought" an annuity. Well, what she really said was, "I have life insurance that pays 8 percent." I blew my gasket. I asked how much the maintenance fee was. Her face froze briefly, but she laughed it off, saying she had already studied the numbers. I asked how much they charge up front: 8, 9, or 10 percent? Her whole body froze this time and she icily said that I was just jealous, as she stormed away.

I'm jealous? The market is going to crash, the bears are going to rule, the world is going to end, and the sky is going to fall! Sounds like a lot of fun to me.