Learn How To Sell Short

When it comes to investing, nothing is more frustrating that the “mushy middle.”

So by now you must be nearly losing your mind. Markets haven’t gone anywhere for the last four months.

I’m not surprised. If economic reports are part good and part bad – which describes nearly every report released lately – then what angle do you take?

Because major market indices are limping along in the middle of a range, barely moving up briefly before settling back again, most investors are choosing to just sit on their hands AND money… waiting for a better day.

The good news is that today IS that better day. The better news is that you won’t have a lot of competition when you invest because most people just don’t recognize the opportunity…

In the past few weeks, the economy is not posting so-so numbers. It’s puking all over itself, spitting up one bad report after another – retail sales, capacity utilization, existing home sales, unemployment… all bad.

Now private companies are jumping on this band wagon. Five of the largest banks just posted combined earnings that are the lowest since the crisis in 2008. Other private earnings from the likes of Microsoft et al have disappointed as well.

How does any of that make today the better day? If the storm clouds are gathering, then what’s the great opportunity? Won’t investments just set investors up for losses? I hear you. But here’s the thing: all of this is perfect if you invest on the short side.

Hang on. Before you dismiss this because short selling is “too hard” or “too risky,” let me say that people only think that because they have no clue how to sell a stock short. They have no idea where they profit as the security loses value. So, they lose out. They stay “long-only,” profiting only when securities move up.

These people should kick themselves. While stocks do tend to rise over the very long term, it cannot possibly be the case all the time. So these long-only investors have two bad choices in a down market, they can either continue to hold their investments and lose or they can move to cash and wait it out.

We prefer the third option thank you: invest so that you profit from falling securities. This is exactly what we have done in the Boom & Bust portfolio, so that subscribers can be on the right side as the markets recognize what the economy is screaming… that is, “there’s more pain ahead.”

There is a reason I long ago predicted that the Dow could reach as low as 3,300 in the coming crash.

There is a reason I have been shouting during TV and radio interviews that small investors could be devastated in the months and years ahead.

Our country, as well as many countries around the world, keeps throwing liquidity at a debt crisis. And it’s not working. It feels good for a little while, then the adrenaline wears off and we find ourselves worse off than when we started.

Economically, this is awful.

For those caught in the debt trap, it is horrific.

For savvy investors, it’s a once in a lifetime opportunity.

We’re nearing the edge of a financial crisis that should be worse than 2008. The way to prepare is to get rid of any debt that can be called, especially where the lender can force you to repay immediately.

Develop streams of income.

And learn how to sell short. Talk to your brokerage firm, because selling short requires an investor to be approved for margin. Read up on the limitations, liabilities and ways to profit from shorting investments.

The very fact that you are reading this article means that you are ahead of the mainstream. When the markets roll over and most people who invest are long only and are losing, you’ll pull further ahead.

There’s always a way to profit, as long as the market chooses a direction. It looks like things are shaping up just as we have been forecasting. Get ready…profits lie ahead!


Harry

 

 

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Categories: Economy

About Author

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.