Investing in the stock market can be incredibly challenging to the average individual investor and professional investor alike. One form of stock market investing it seems to confuse just about every kind of investor is short selling.
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Though most people understand the concept of short selling, many become confused when you start talking about short selling during a bull market, but that's exactly what I'm going to talk about in this article today because there are quite a few ways for you to make substantial amount of money during bull markets with short selling even though this sounds completely counterproductive to all common sense and all investing strategies!
I'm not going to lie to you. Suggest to someone that they make short selling a cornerstone of their bull market strategy and they'll look at you like you've lost your mind. But you haven't lost your mind at all, you're just cagey!
The fact of the matter is, even during raging bull markets we will see periods of decline. People think of this as the stock market gasping for breath after a long run up. It's these little gasps or downturns that offer great opportunities for selling short and making a quick buck or two; here and there.
There are several rules that you should follow when selling short in a bull market that can help keep you from getting clobbered.
First sell only heavily capitalized stocks that have very low current short interest. These stocks are less likely to get hit by a short squeeze which is a sharp rally that is caused by a lot of short-sellers rushing to cover their positions when there are too few shares available. If a company doesn't have a heavy capitalization and you have to rush out to cover your position, there may not be stock available to purchase! Keep that in mind.
Next cover your positions at the end of the week. Why is this? During regular bull markets, favorable news can filter out over the weekend that can cause the stock to jump in price considerably at the start of the next trading week. You don't want to wait until after that news has come out over the weekend and then scramble to cover your position in an increasing market on Monday morning. It's better just to cover before the weekend if at all possible.
Next don't sell short stocks that have recently made new highs or all-time highs. I know you'll be tempted to because it seems logical that a stock that has risen high will take a period to settle back down a little. But during a bull market all bets are off and stocks can continue to rise past all-time highs without gasping for breath as it were. british pound It's much better to wait for definite signs of weakness after all-time highs before jumping in with a short position.
So there you have several ways to both make money selling short during a bull market and covering yourself if something goes wrong while you are selling short during a bull market. As with all investment opportunities, be sure to do your own due diligence and proper analysis before making any investment decisions.
The silver bull market has just begun, and there is still time to get positioned if you do your homework now. To some investors, silver may seem like an odd place to put your money. After all, most people invest their money in fancy financial vehicles like stocks, bonds, mutual funds, IRAs and the like.
What most people are not aware of is the nature of the silver market right now. The silver market is just getting fired up to be the best investment for the near term and long term. Why silver? Why not gold?
Gold is an excellent investment right now considering the way central banks are inflating our paper money supply. Silver, however, is set to outperform gold by a large margin.
Silver is one of the most undervalued assets out their today. It may actually be the most undervalued asset out there. Silver is dirt cheap right now at $15.50/ounce. They are practically giving it away considering all of the industrial and investor demand for the metal.
Silver is also at all time low inventory levels above ground. There is actually 5 times less silver above ground than gold. So, why is gold trading above $1,000/ounce while silver is trading under $20/ounce?
It's complex, and there are many factors keeping the price down. I'll try to explain what I know about the silver price manipulation. The price of silver is being kept artificially low for many reasons.
The big commercial shorts like JP Morgan and HSBC on the COMEX (Commodities Exchange) have been short selling silver. It's legal to sell commodity contracts short, but the problem is that the banks are way over their allowable contract limits.
This short selling allows the banks to keep the price suppressed. Add into this mix an increasing investor demand, huge industrial demand, demand from China, and the already short supply of silver and you have a market just waiting to explode.
The catalyst that will rocket the silver price out of the solar system is the move away from paper currencies by countries and individuals. People are already starting to diversify their portfolios into silver and other precious metals.
This demand is just getting started, but when the full on panic phase hits, which will be approximately the same time we see currencies around the world start to collapse due to devaluation, you will wish you were positioned.
The size of the silver market is so tiny, so minuscule, compared to any other market that the entire market could be bought up for $20 billion dollars. This is an amazing opportunity just waiting to be tapped into.
If you are anything like myself and would like to be prepared for the inevitable currency crisis ahead, you will want to further educate yourself on the silver bull market.