2 Massive Reasons to Practice Short Selling Stocks
Most people think about trading as simply buying a stock and profiting when the stock goes up. Well, it’s time to change your thinking because that’s only half the game. That’s only 4 1/2 innings of a 9 inning game.
You ever play half a game and win it?
The First Reason to Short Sell
Stocks, property, commodities … toothbrushes; when you add up everything of intrinsic value in the world, at the end of the year it’s worth about 3 to 4% more than it was exactly a year ago.
That’s right, it’s inflation. The net result of all the triumphant gains and all the catastrophic losses when you look at the big global picture is a measly 3 or 4%, otherwise known as the rate of inflation. So when you see companies on the stock market making gains of 10, 20, 50, 200%, it means something else, somewhere, somehow … has to go down.
Or else we’d all be paying $12 for a toothbrush.
So other than that 3 or 4%, half of everything that happens in the world of investing involves losses. Price drops. Devaluations. In short, the market goes down. It’s half of the entire game. Half.
With short selling (betting a stock will drop), you can play that other half.
The Second Reason to Short Sell
You ever get the chance to talk to someone really successful? And all you want from them are those 7 magic steps that will allow you to do what they do with the same great success. And they talk about everything EXCEPT how they do what they do.
And it sucks. You think they’re just not willing to give you the “secret recipe”. Well there’s actually a lot of value in what they have to say, no matter what it is. Because it’s all part of their mindset. And those magic steps to success that they have; they come from that mindset.
And that’s what short selling gives you as an investor. It changes your thinking and gives you a fuller, more complete mindset…
- You’ll realize just how easy a great stock from a rock-solid company can go down the tubes.
- You’ll build a better understanding of fundamentals and hype, and how they make stocks go up AND go down.
- You’ll start to learn different hedging strategies that can mitigate your losses if a trade goes sour.
And of course, short selling means you’re never stuck playing just half the game. So grab your bat. You’re up.