market folly

Many investors have called short selling one of the most difficult things to do in finance.  There's potential for unlimited losses, the position sizes get smaller if you're right, and you're constantly going against the crowd and battling waves of optimism.

Kase Capital's Whitney Tilson has put together a presentation entitled, "Lessons From a Dozen Years of Short Selling" that he delivered at Columbia Business School.

In it, he presents both sides of the argument, listing 12 reasons not to short and then 10 reasons to short.

In a recent interview, Tiger Management's Julian Robertson said that it's hard to run a hedged portfolio in a market that seemingly only wants to go up.  But even in an ever-rising market, there will always be frauds and fads, and more often than not, that's what short sellers target.

Embedded below is the full presentation on shorting.



You can download a .pdf copy here. 

For more on the subject, we've also posted up another hedge fund manager's take on short selling.