The Market – Danger of Selling Short

October 31st, 2006

I read an article today on CNBC that suggests the following:

“There also has been crafty speculation by traders in stock index futures, who bought heavily whenever the indexes turned lower and forced short-sellers to cover. Short-sellers borrow stocks and sell them, hoping to buy the shares later at a lower price and making a profit in the process.

We say “traders buying futures” assuming there is more than one trader making these buys, but some traders are actually talking about a “mysterious buyer” since the force of the buying is so narrowly targeted.”

Though I try to not be too much into conspiracy theories, I could easily see a group of powerful hedge funds playing the market technicals.  The market will definately try to take advantage of short sellers.  This is a good example of another reason why small investors should only stick to the value game. 

Entry Filed under: The Market

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