RE:RE:RE:RE:RE:RE:Shorts Are CoveringHey Vitalina,
There have always been a large number of stocks to potentially short. From the tech wreck in 2000, to the financial crisis 2010 to covid 2020 etc. etc. In relation to the small cap stocks on the venture, mining companies; mining for whatever and getting good initial drill results which leads to the four stages of the chart (potash, lithium, rare earth manias etc etc).
Personally, I do not believe the mechanics are good for consistent shorting;
The mechanics are not the same as going long; borrowing shares (paying an interest rate to do this), creating an artificial float which leads to a short squeeze where losses are potentially unlimited to the upside. Deciding where to initiate the short on the parabolic chart. In hindisight, I find that shorters constantly say look at the chart it's parabolic I'm shorting it (keep in mind you're not saying this here).
Yet, I also find that the majority of shorters irrespective of experience, get blown out at some point in there career when one or two ineveitable short squeezes occur and losses are unlimited. The latter is the main issue for consistently shorting. This has happend to almost all of my colleagues that have consistently used shorting over a period of decades.
I have substantially more issues for institutions that consistently use shorting. In addition to shorting, these institutions also use; timing the market, leverage and derivatives. The latter points are the prefered tools of hedge funds. The reason that I constantly say that hedge funds are the dumbest money on the planet is because they have the worst performance of any fund manager.
This was clearly shown by the singular best investor of all time, Warren Buffet. The fees that hedge funds charge are almost criminal 2:20 etc. Hedge funds constantly blow up and more are created due to the lucrative fee structure and the naive public and institutions that subscribes to them. Even though hedge funds represent only a small fraction of money that is managed, when they blow up they cause substantial systemic risk. Interesting that currently the longs are well regulated however the shorts rarely are ie. naked shorting, insufficient capital requirements.
When I started investing, I intensly studied the market. I did not use any preconceived biases/notions (value investing, momentum investing, shorting etc). I wanted to know the factors that consistently moved the line from the bottom left to the top right of the chart over a long period of time. There are many factors but the number one factor is consisently beating the earnings/revenue estimates or for a small cap company, initially generating earnings/revenues and growing them.
Vitalina it's great that you have an overall investing strategy that works for you. I'm not sure if you stated that you have consistently shorted stocks over a long period of time and made a good profit.
I know this is a long post, just thought that I would post my overall opinion on consistent shorting.
This is my all time favourite chart, personally I like surfing on the big wave.
https://stockcharts.com/freecharts/historical/marketindexes.html
GLTA,
Sam