Why Short-Selling May Work (for You)by InvestorGuide Staff
Regarding short-selling, some investors are better at identifying overpriced, bad companies than underpriced, good companies. Brokers and analysts focus on what to buy, not what to sell, so the good news is more widely known than the bad news. When an analyst issues a sell recommendation on a stock, they find it much harder to get information from the company's investor relations department, and the analyst's firm would never get an opportunity to raise capital or float a bond for the company, so they focus more on good news than bad. If you discover bad news, it might not yet be totally factored in to the current price of the stock.