Shorts are EVIL: NOT

No they are not. Shorting is just like buying a stock, it just have a negative sign associated with it.

Short selling occurs when an investor borrows a security and sells it on the open market, planning to buy it back later for less money. Short sellers bet on, and profit from, a drop in a security's price.

Shorting a stock, crypto, future, commodity is a century old practice. There is nothing new about it. From time to time we hear that short is bad, evil or even un-patriotic. Don't worry about it. It is BULLSHIT! Shorting is as important as buying a stock, without shorting there won't be any market.

That being said, I think you probably can guess why I am talking about it. It is because of Game Stop (GME) and associated stocks. My broker TD Ameritrade sends me the following message last week:

Securities with trading restrictions We have placed some restrictions on the following securities. These restrictions will not prevent clients from making basic buy and sell transactions. This list is as of January 29, 2021, 4:30PM ET.

AMC, CVM, EXPR, FOSL, GME, NOK, BB, BBBY, FIZZ, GSX, IRBT, NCMI, TR, UONE, VIR, NAK, NAKD, DDS, KOSS

The following restrictions are in place:

Stocks - 100% holding requirement (not marginable) Long calls and puts are allowed Covered call and short put orders may only be placed with a broker. Please be aware that wait times to speak with a broker may be longer than normal due to current market conditions. Covered calls only allowed if your account currently has the shares Short puts only if you have the maintenance/cash to cover the entire exercise amount of the short puts All other complex options orders will not be accepted

First, if you don't know about the GME short squeeze you should google it as it is a fascinating story.

Above is a recent messange from r/wallstreetbets. The story is so fascinating that I had to become a member of the sub-reditt! I don't even trade individual stocks! But the story is too good to miss. In a nutshell, the story is as follows:

A group of individual investors/traders started buying stocks of GME in a coordinated manner. Incidentally GME is a struggling company facing bankruptcy (possibly), and the stock was heavily shorted earlier by several hedge fund. Due to the coordinated and massive buying of the stock the prices rallied BIG, and many of the shorts were forced to cover at a massive loss. Some (a lot) still remain holding their short at a massive loss. That's all. This is a simple story.

Where it get interesting, is this type of event happens everyday at the market. The cool and strange thing about it, usually the individual traders are on the receiving end. They are the ones get squeezed/slaughtered. But this time it is different. It is the 'smart money' who is getting squeezed. I think that swells!! Bring it on. It is time we show them guys that we can win too :)

It is the power of social media at work. When used well we can beat them. Now it is really funny to watch them squeal and all media is covering the story from the hedge fund angle, as if the regular guys did something wrong. They didn't. They just bought the stock and they have every right to do that as any price. No one can stop them to do it.

Individual buyer are cool! There is no 'smart money', its a myth. I mean the money is there, but they are not necessarily 'smart' :) I have seen them all and they can be as dump as the next guy. Shorting is cool, buying is cool. As long as you do those activities legally its cool. Just keep the free market going and cut out the noise and conventional wisdom.

Disclaimer: This is NOT professional advice, this is all just my own opinion and experience. I am NOT a Certified Financial Adviser. Consult professionals for any financial, accounting or legal related questions you have.

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