I make this post because I see many boarders showing a sympathetic attitude to a falling market and making a villain out of a correction or even a short term bear trend whereas the fact is that it is the markets way of flushing out the excesses of the previous move. No market can remain in a bull or bear trend forever.
Is shorting stocks ethical?
Some people claim that shorting stocks is un-ethical because they are contributing to the stock price going down. This is nonsense, and equally illogical is the fact that shorting is not allowed in our markets except intraday and fno. Remember that after you short a stock, you then have to buy it back! This creates buying pressure on the stock.
Short sellers slow the rapid decline of a stock by buying to cover on the way down. If the short sellers were not involved in the stock, it could plummet into a very rapid decline; ( Imagine only sellers and no buyers? Also, short sellers can be caught in a "short squeeze".
There is nothing wrong with shorting. It's just part of the mechanics of the stock market.
I think it is essential that a trader learn to short stocks. Buying stocks is only half of the equation! If the market in general is in a downtrend, you are not going to want to be buying stocks and attempt Hara Kiri. So in order to make any money you need to learn the art of shorting.
Sometimes you can make money faster by shorting than by buying. Why? Because stocks typically go down at a faster rate, then when they go up! Fear appears to be much more powerful emotion than greed.
The general public thinks that if a stock goes up, then this is "good". If a stock goes down, then this is "bad".
Wrong! It depends on which side of the market you are on.
I think Dalal Street really doesn't want the public to know about shorting stocks. In a bear market, market professionals on TV talk about how "horrible" the market is to encourage investors to sell.
They are shorting stocks and profiting all the way down...
