Sometimes. I love it when I can profit from the bad news. I definitely don't like it when the bad news concerns me.
The point I am making here is that when everyone thinks the sky is falling, money can be made because you can short stocks.
Shorting a stock is simply betting that the stock will go down and then you can buy it back.
The real advantage we have here is that people are scared to short stocks. Seriously. Go ask a group of 5 friends. Unless they are already into day trading, then chances are they are scared. It sounds scary. Technically you can lose an infinite amount of money. That sounds really scary. If I buy a stock for $100 and it goes to $0, I only lose $100. However, if I short a stock at $100, and it goes to $1,000,000, well then I owe about a million bucks.
The reality here is that since we are day trading and since we have insurance, the infinate loss isn't going to happen. (knock on wood)
The point here is that not shorting stocks is a missed opportunity.
Shorting is also very important, because it is easier for a stock to go down than to go up. If the stock goes up, it is most likely because of a company doing well or positive rumors. That is a lot harder to do than doing nothing or sucking. If a stock is stagnant for awhile, people can get tired of it and that causes the stock to go down. Did the company do bad? No, the buyers got annoyed with the stock, so the moved on. Another fact is that hedge funds love shorting the fuck out of stocks. They do this to manipulate the market and get investors scared so they sell their holdings. This is good news for us, because it helps keep this zigzag going.
Another major advantage right now is that our economy is doing really bad. This means it is MUCH easier to have stocks go down, than up. Seriously. Go look yourself. The evidence is staring you in the face. As soon as the DOW went back up to 9500 with all the good news, it took days to go below 9000 again because it is so much easier right now to have bad news.
Does anyone notice a pattern?
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