Inordinate Issues with Short Positions Keeping Capital and the Enterprise in Close Proximity

Shorting Mimics Characteristics of a Bad Business

How would you judge an investing strategy that had the following fundamental economic characteristics: 1) Limited potential returns, but unlimited potential losses; 2) Skyrocketing competition; 3) Tax inefficiency; 4) Aggregate net losses over its history; 5) The elimination of a significant source of income in recent years; 6) Risk of asset repossession at creditors’ whim. Having spent 15 years of my career doing nothing but short selling – including periods of great prosperity and other periods of fast, painful losses – I can argue with some authority that, as an investment strategy, shorting suffers from each one of these characteristics of a bad business.