Tuesday, March 25, 2014

The Art of Short Selling - Preface

The analytical methods of great short sellers are characterized by prodigious analysis attentive to (1) the quality of earnings, (2) quality of assets, (3) and, quality of management.

You are looking for a bad business run by incompetent managers.

The years 1991 to 1993 decimated the population of short sellers. Those years saw the ascendancy of mutual funds, of momentum investing, and of the short squeeze.
(sounds eerily like 2012-2014 with ETFs, momentum investing, and short squeezes)

The simplest techniques work year in and year out - rising inventories, and insider selling.

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