You are shorting already!

For me, going long or short is no different from betting black or red at the roulette tables in the casinos

Whether you call it an "investment" or speculative trade, it's just a directional bet - up or down. Nothing more; nothing less.

Most traders don't have a problem with shorting - think about it, does it smell like a "rigged  game" if you are only allowed to bet black at the casinos?

Somehow, when it comes "investing", some politicians and "investors" go on a epilepsy fit and/or start a witch hunt whenever there is "shorting" in the market...


You know what?

Whenever you go  "long" on an asset, you are simultaneously going "short" something else at the same time.

If you are buying equities today, you are long equities - making a bet it will go up in whatever time frame you had in mind. 

You have to pay for the equities with something in exchange. And that's normally cash.

Do you see it? 

You are in fact "shorting" cash and going "long" equity within the same transaction!

You are betting that your cash will be "rotting" in your account and equities will outperform cash.


Similarly, if you are taking some money off the table or selling your equities today, you are "short" equities and going "long" cash.

You believe cash will outperform equities in the near future. Don't lose money is outperformance right?


Rotating between cash and equities is the simplest and cleanest method if you have problems using leveraged instruments like CFDs or Futures to "short" the market.


Another way instead of cash is the traditional equities and bonds asset allocation method. You are "shorting" bonds if you rotate out from bonds into equities. And vice versa "shorting" equities if you rotate back into bonds.

This is not popular with retail "investors" as most do not own bonds or are familiar with it. 

By the way, most Finance trained graduates are familiar with bonds and their relationship with interest rates. If you are not Finance trained, do bring your knowledge up to speed so that you don't bring a flick-knife into a gun fight...

There's a saying bond traders are smarter than equities traders... Don't look at me. I didn't say it!


For those die die must be 100% invested in equities at all times, there's a solution too! Especially if you know when you rotate into cash, you have difficulty getting right back into equities.

After a good run with speculative penny counters, you now want to protect the winnings. You can rotate into defensive dividend paying stocks while maintaining your pristine 100% vested at all times conviction.

Of course your defensive counters will drop in a market correction! But the key word here is relative. 

It's not so bad if your defensive dividend stocks drop 10% while you previously-owned penny stocks are now 20-30% down, is it?

And if you believe the tide has turned, you can "short" defensive dividend stocks and go "long" and rotate back into your bombed-out speculative penny stocks once again. 

Eh? Why am I hearing Katy Perry's Hot N Cold song in my head now?


Before I go, I'll leave you with one Science law and one Spiritual symbol for you to ponder on next time you say you have never "shorted": 


Newton Third Law of Motion

For every action there is an equal and opposite reaction.


Taoist symbol