Stock market contracts are extremely intimidating. Everything is tied up in legal jargon and the word “risk” is plastered all over any honest explanation. I don’t recommend anyone’s first stock market transaction being anything other than a stock, or better yet, an index or mutual fund.
Despite all my “doom and gloom” predictions, I never have shorted any stock or fund. One reason is that inflation might raise the dollar price of a stock despite the actual value decreasing. A bigger reason is timing. When choosing stocks to buy you can hold your position for as long as you want and wait for the profits to emerge. When you short, you’re on a tight time frame. I don’t know enough to call that type of timing. [Read more…]