This has been covered before, I'm sure, but I am not finding clear responses that outline why this is a bad idea. I work in the Accounting field, so I've got a basic understanding of finance/investing with little experience. This is not a question about investing in penny stocks - I don't think that is a good idea given the volatile nature of them. If you take stocks that are on the "pump" side of a pump-and-dump, do your due diligence on the company you are trying to short - researching prior years' financial statements, learning trends of similar companies/stocks, current events within the company etc. - why is it a bad idea to try and short? From my understanding, finding buyers during the "dump" is the hard part, not being the buyer. In a short position, you're looking to buy stocks after they've dropped in value to give back the shares you borrowed to the broker from which you borrowed, which intuitively would make me think you're in a fairly strong position. People are looking to get out of their shares and you're looking to buy. I understand there is calculable gains and potential for infinite losses, but if you're doing your due diligence the risk should be mitigated, as you're not taking a flier on any old penny stock. What am I missing?
Submitted March 01, 2017 at 08:01AM by HeyNeighbor5 http://ift.tt/2lT8GKX
