The wild ride for GameStop Corp.’s stock illustrates the power of social media to force short-sellers — even professional investors — to give up on their positions and book heavy losses. But talk of individual investors “breaking” the mechanics of the stock market may be premature.
Regardless, GameStop’s action illustrates, once again, why non-professionals shouldn’t short-sell stocks. What makes shorting stocks best left to professionals is the potential for unlimited losses. In contrast, if you buy shares of a company and the stock falls, your potential loss is the amount of your investment. It can be wiped out if the company goes bankrupt.
Two lists of heavily shorted stocks Starting with the S&P Composite 1500 Index , here are the 20 stocks with the highest percentages of shares sold short against the total number of shares available for trading:The short percentages supplied by FactSet are updated twice a month, based on the most recently available data for shares sold short and the number of shares outstanding and available for trading as of the previous month-end.
Lamensdorf stressed that in a bull market, a short-only fund is “a very lonely place,” and that it is meant to be used to help investors create their own long/short strategies. When asked how it was possible for more than 100% of GameStop’s shares to be sold short, Lamensdorf said that there are places where people can have “naked” short positions — those that didn’t involve actually borrowing the shares to short them.
Take a look at the second company on the second table: Amazon has only 1% of its float sold short, but that adds up to $12.7 billion. Next is Apple with a significant 5% short, for $12.5 billion. Other companies on the list that may surprise you include Microsoft Corp. MSFT, +1.66%, Facebook Inc. FB, +1.79% and Nvidia Corp. NVDA, -1.32%, but again, these companies have relatively small percentages of short-sales but large market capitalizations.
If you go into the stock marketing not knowing there is always risk...
thanks
...but if you do it as a fund you may get bailed out when your plan backfires...
This feels like a PSA.
hard to imagine that if you know how, and have the means to short sell, that you would also be unaware that your potential losses are endless & infinite