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The Art of Short Selling



The Art of Short Selling

Kathryn F. Staley

ISBN: 978-0-471-14632-2 December 1996 304 Pages

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A one-of-a-kind book that shows you how to cash in on the latestinvesting trend--short selling

"The Art of Short Selling is the best description of this difficulttechnique."--John Train, Train, Thomas, Smith Investment Counsel,and author of The New Money Masters

"Kathryn Staley has done a masterful job explaining the highlyspecialized art of short selling. Her approach to telling the truestories of famous investment 'scams' will keep the readerspellbound, while teaching the investor many cruciallessons."--David W. Tice, Portfolio Manager, Prudent BearFund

"Selling short is still a misunderstood discipline, but even themost raging bull needs to know this valuable technique to masterthe ever-changing markets."--Jim Rogers, author, InvestmentBiker

On the investment playing field, there is perhaps no game moreexciting than short selling. With the right moves, it can yieldhigh returns; one misstep, however, can have disastrousconsequences. Despite the risk, a growing number of players areanteing up, sparked in part by success stories such as that ofGeorge Soros and the billions he netted by short selling theBritish pound. In The Art of Short Selling, Kathryn Staley, anexpert in the field, examines the essentials of this importantinvestment vehicle, providing a comprehensive game plan with whichyou can effectively play--and win--the short selling game.

Whether used as a means of hedging bets, decreasing the volatilityof total returns, or improving returns, short selling must behandled with care--and with the right know-how. As Staley pointsout, "Short selling is not for the faint of heart. If a stock movesagainst the position holder, the effect on a portfolio and networth can be devastating. Investors need to understand the impacton their accounts as well as the consequences of getting bought inbefore they indulge in short selling." The Art of Short Sellingguides you--clearly and concisely--through the ins and outs of thishigh-risk, high-stakes game.

The first--and most important--move in selling short is to identifyflaws in a business before its share prices drop. To help youtackle this key step, Staley shows you how to evaluate companyfinancial statements and balance sheets, make sense of returnratios, detect inconsistencies in inventory, and analyze thestatement of cash flows. Through real-world examples thatillustrate the shorting of bubble, high multiple growth, and themestocks, you'll proceed step by step through the complete processand learn to carry out all the essentials for a successful shortsell, including quantifying the risk factor and orchestratingcorrect timing, as well as implementing advanced valuationtechniques to execute the sell/buy.

Packed with landmark, cutting-edge examples, up-to-the-minuteguidelines, and pertinent regulations, The Art of Short Selling isa timely and comprehensive reference that arms you with thenecessary tools to make a prepared and confident entrance onto theshort selling playing field.

Overview: Wealth with Risk.

Short Sellers.


Bubble Stocks.

High-Multiple Growth Stocks, Part 1: High Risk, Low Return.

High-Multiple Growth Stocks, Part 2: High Returns, FalteringGrowth.

If You Can't Read It, Short It.

Money Suckers: Coining Money to Live.

If You Can't Fix It, Sell It.

Industry Obsolescence: Theme Stocks.

All of the Above: Crazy Eddie.



History and Controversy.

Six Pillars of Fundamental Short Selling.