Why do people always look to 'buy', not to 'sell'???!!

Discussion in 'Trading' started by spanish89, Oct 4, 2008.

  1. Im really really curious and confused about this...

    The only reason i can think of is some ridiculous nationalism that makes them want to try saving the economy.. lol
  2. over 90% of my trades are short.

    I am currently short CBL
  3. clacy


    Maybe because over the long term, most stocks rise.
  4. I assume by people you don't mean trader because a trader should be shorting resistance during downtrends and buying support during uptrends.

    Depending on one's chart fractal, this could be as close as to 50/50.

  5. hughb


    I prefer the long side of the market.

    While you are confused about why people are always looking to buy, I'm flabergasted by crashistas and permabears always coming up with absurd conspiracy theories. They never admit they are wrong, they are simply victims of a conspiracy to keep the market up, (never mind the market has declined over 20% in less than a year and they still lose). those nameless, faceless ghosts known only as "they" have ruined many a market call by the anonymous internet chatter. They will start yet another thread about how America is going to hell in a handbasket and blaming "they" when they get smashed on their next short trade.
  6. hughb


    Having said that, I would like to short ag chemical stocks if they ever give a good entry by rallying again.
  7. ammo


    you'll have to wait for they(paul bunyan,jpmorgan,lehman ,bear stearns,merrill,morgan stanley,.... some of the theys became we')to push them back up
  8. I asked one of my college professors this very question a few years ago and he kindly pointed out to me that the stock market had basically gone straight up since WWII. I said, "Oh." He had a great point. Why wouldn't you want to buy when the market basically goes up over time. The market expands much more frequently than it contracts so I suspect people get conditioned. Few people even understand the basic concept of selling short. I've explained it until I'm blue in the face to the average investor and you still get that deer in headlights look.

  9. Compounding works in your favor when you are long, and it works against you when you are short. A losing long stock position eventually becomes a negligible part of a portfolio while the winners become gargantuan.

    You also have a lot more flexibility with your entry strategy when you are buying than you do when you are shorting. You can't effectively martingale a short position, but you can with a long position. On the flip side, you can't pyramid into a short position anywhere near as easily as you can pyramid into a long position: your short position gets smaller and smaller as you are correct about it, meaning you have to sell like crazy just to keep a good size, whereas a winning long position will get larger and larger organically, so you can add to it modestly for huge effect.
  10. Many reasons:

    Historical reversion to mean after large deviations.

    Lognormal price distributions.

    Long term postive drift.

    From a pragmatic point of view, shorts have experience in getting ripped on squeezes. Like putting fingers in a flame, you can develop a pavlovian based fear response to shorting.:D
    #10     Oct 4, 2008