How You Can Profit as Stock Prices Fall

The Penny Sleuth Features: Penny Stocks, Options and High-Growth Opportunities! How You Can Profit as Stock Prices Fall By Jessica Comitto April 8, 2011 Dear Penny Sleuther, Shorting the market has always been a controversial strategy... but in many ways short sellers actually help the market. Viewed as a counterweight to the bullishness of Wall Street, short selling can be essential to price discovery. In any market climate, short selling can be a great way to hedge losses in your portfolio. Let me show you how... Use "USC 78a Documents" to Predict the Market's Moves! These "hidden" government documents let you predict which stocks will go up or down. You could post 400%-600% gains on these moves! Don't miss out on the next one. The next filing date is less than two weeks away... If you think a particular stock is going to fall, one way to make money as it falls is to short it. Simply put, to short a stock you "borrow" shares and then sell those shares at market value and pocket the proceeds. When the stock falls below the share price you sold at, you can buy back the borrowed shares at the lower price to give back to the owner (known as covering), pocketing the difference. To short you will need to open a margin account with your broker. Your broker will arrange the delivery of the borrowed shares. There is often a ready supply of shares to be borrowed, usually owned by pension funds, mutual funds, or individual investors. Finding the Right Stock Finding the right stock to short can be a little bit tricky, but there are many aspects of a stock you can look at when finding the right stock to bet against. Generally, you want to make sure that the stock you are looking to short has high liquidity, which means that there are a decent number of shares being traded. Some good signs of a short selling opportunity are when a company misses its quarterly earning estimates, its fundamentals are dwindling, sector trends are declining, or the stock is seeing high insider selling. 6 Penny Stocks to Own Right Now... Greg Guenthner, editor of Penny Stock Fortunes is giving away SIX penny stock recommendations to all new subscribers! But you must hurry because these plays could explode at any time. Click here to watch the presentation now. Too Good to Be True? It all seems simple enough... you sell high, buy low, and then keep the difference. But there are some risks when short selling that you need to be aware of. As I mentioned earlier, in order to start shorting, you will need to open a margin account with your broker. There may be additional margin costs involved when you are shorting the market and you will have to pay out any dividends that were paid during the time frame you were borrowing the shares. In the case of "hard to borrow stocks," you need to also be mindful of the trading activities of the owner of the shares you are borrowing. If he decides to sell his shares before you have covered, you will have to return the shares to him by either purchasing at market value or borrowing them from somewhere else. This is known as a forced buy-in. Your broker will have a list of these companies. How to Turn $500 Into $15.1 Million Introducing your "30-Day Retirement Plan". It's happened before. It could be about to happen again. So will it happen to YOU? Get all the details on your "30-Day Retirement Plan" - right here. Most importantly, unlike long investing where you can only lose what you invest, with short selling losses are hypothetically limitless. If a stock you are shorting goes up, you will have to buy shares at the current price to cover your short, resulting in a loss. A "short squeeze" can cause a rising stock with short interest to rise even higher when fellow shorters are also attempting to cover their short. High Risk, High Reward Most investors won't short stocks because they don't know how or because they are scared. While short selling does have high risk, you can also reap high rewards- especially in a down market. Picking the right stock to short can easily help you book fast gains. Just remember not to chase your short; set a price you will buy shares back at, and stick to it. Have more investment questions? Please feel free to send any questions you have about investing directly to me at editor@pennysleuth.com. Sincerely, Jessica Comitto Associate Editor, Penny Sleuth P.S. Worried about not having time to research your own stocks to short? In the Strategic Short Report, Dan Amos does all the research for you. To find out more, click here. Shock Video: 123 Winners in 127 Moves - Get The Next Profit Alert on Wednesday This new presentation reveals amazing market strategy that recently cranked out gains with 97% success. This is easy. It's fast. You don't need special skills or connections. Check it out here. How You Can Profit as Stock Prices Fall is featured at Penny Sleuth. The Secret $200 Retirement Blueprint Investing in Penny Stocks What Is Technical Trading Follow the Penny Sleuth on Twitter, here. Become a Facebook Fan of The Penny Sleuth, here. The Penny Sleuth, a free e-letter, offers independent news and commentary on small cap stocks, options and high growth opportunities. We sent this e-mail to KNUMASSCN@gmail.com because you or someone using your e-mail address subscribed to this service. Are you having trouble receiving your Penny Sleuth? You can ensure its arrival in your mailbox by: Whitelisting Penny Sleuth. To end your Penny Sleuth e-mail subscription, click: Unsubscribe. The Penny Sleuth is your free and independent source for analysis, commentary and news on small cap stocks, options and high growth opportunities. At the Penny Sleuth, we give your our 100% independence pledge. That means that we never receive compensation to talk about any stocks we feature. Our editorial staff never owns a position in any of the stocks we mention at the time of publication. And we only recommend stocks that we come across in our own original research. Our pledge also means that we won't collaborate with companies who don't live up to our independence requirements. Nothing in this e-mail should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. © 2011 Agora Financ ial, LLC. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the World Wide Web), in whole or in part, is strictly prohibited without the express written permission of Agora Financial, LLC. 808 Saint Paul Street, Baltimore MD 21202.