Question 91—Disadvantages of Shorting
Answer 3 Rises over time.
The one great disadvantage of shorting stocks is that the broad stock market has a centuries-old tendency to rise over time. The estimates vary, but an average 3% rise per year above the rate of inflation seems like a reasonable estimate. This means that in shorting you are swimming against a gently rising tide. To deal with this, you want to be more short-term oriented in shorting than in buying. The uptick rule is no longer in effect in the United States.
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