Short Selling Stock Myths

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    Un-American

    • Stocks will fall regardless of whether or not the investor sells short. Betting on stocks falling is not unpatriotic, nor is it profiting from others' misfortune. It's actually helping overpriced stocks find their true value.

    Upside Bias

    • The idea the market has an upside bias is only true with market indexes over the long term. Short sellers work in the short term, so there's nothing to fear.

    Market Trends

    • Short selling is not necessarily going against market trends. Each individual stock has its own cycle. Opportunities to make money are always present, regardless of market trends.

    Hurts Market

    • Short selling doesn't deteriorate stock prices or damage the market. In reality, short selling adds liquidity to the market and improves trading efficiency, increasing both demand and price stabilization.

    Unlimited Risk

    • Selling short is no riskier than other forms of trading. Using stop orders, which sell when stocks hit a predetermined price, limits the amount of risk involved with selling short.

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