Thursday, March 10, 2011

A Note of Success

I try to avoid shorting stocks that are heavily shorted by other investors.

Sometimes there are good reasons that a stock would be heavily shorted but not vulnerable to a bad squeeze, like bondholders shorting the stock to hedge, but I think long and hard about getting involved in a crowded trade.

This principle served well today.

Despite the big selloff, the crowded shorts like Netflix, Green Mountain Coffee Roasters, and OpenTable (all of which I really do think are dogs) were up huge: 3.6%, 41%, and 1.65%.

2 comments:

CP said...

http://www.businessinsider.com/shorting-is-hard-2011-3

economic said...

Coffee guys are junk, but good to sidestep....for now.