Subsets of the Market that Make for Good Short Sales Don’t Short on Valuation

Wait Until the Cracks Appear Before Getting Involved

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One thing we like to do on the short side is to see things start to break down before we get involved. Once something starts to crack, there will still likely be plenty of disagreement – reflected in the stock price – on whether or not the business is really broken. So we’ll typically miss the top, but the risk/reward can look even better to us long after the break.
Source: http://www.valueinvestorinsight.com/