Quote:
Unlike going long in purchasing silver, in theory, the potential loss is unlimited when shorting. - OneBowl
In order for that to occur, the price of the shorted item would have to be unlimited as well, for it is the rising price that creates the loss in a short position.
The fact is that VERY large (but not unlimited) losses can occur in a stock that is shorted and that just keeps rising. Shorts can then either cover their bets by giving their brokers more money to sustain their position or they can liquidate them and accept the loss at that point. Going long does have a downside limit and that is "0" in the price of the stock. Upside is also limited but only by common sense in most cases. In a few cases, the upside potential of a stock or commodity have been truly spectacular.
As an investor, I have never been on the short side. There are a lot of things I haven't done in investing and much of it has to do with the amount of risk involved. I try to limit that to an amount with which I can be comfortable and not be sweating all the time just thinking about my investments. That's no way to live, IMHO, but some people, like Jim Cramer, seem to thrive on it. Oh, well... to each their own.
As to gold and silver... yes, I also am on the long side of this investment. So far, so good!
