Short Squeezing Profits

I am not a fan of shorting stocks, mainly because I'm not keen on making bets with unlimited downside and a capped upside. But, other unattractive reasons prevent me from shorting, specifically, a stock that continues to increase in price, forcing you to take the loss, only to see the stock price start falling afterward. I think short sellers like David Einhorn, who shorts for the right reasons, provides a valuable cleansing mechanism to the market.

Since I'm not as good as Einhorn when it comes to shorting, I use the trade from another angle in searching for opportunity: Seeking quality companies at decent valuations that have the added catalyst of a short squeeze. When the market's opinion of a business whose stock is heavily shorted begins to improves, the stock's upside climb gains a strong tailwind from all the short sellers looking to cover, or buy back, the borrowed shares....456 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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