The Art of Short Selling (A Marketplace Book) Kindle Edition

3.8 out of 5 stars 39 customer reviews
ISBN-13: 978-0471146322
ISBN-10: 0471146323
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Editorial Reviews Review

To "sell short" on Wall Street, an investor finds overpriced stocks and then deals them before actually buying them. Regularly falling in and out of favor, the discipline remains one of the financial market's highest-risks but most profitable practices. The Art of Short Selling by Kathryn Staley, an expert in the field, uses examples and instructions to show how it can be done successfully--while cautioning that it "is not for the faint of heart."

From the Publisher

Imagine selling a stock or security you don't own at a high price, buying the shares later at a lower price when the stock falls, and then pocketing the difference for a handsome profit. This timely guide takes readers through the entire process of short selling, from what it is to exactly how, when, and why to sell short. Up-to-the minute trading examples, guidelines, and pertinent regulations clearly illustrate the most current applications and techniques of short selling.

Product Details

  • File Size: 3509 KB
  • Print Length: 304 pages
  • Publisher: Wiley; 1 edition (May 2, 2008)
  • Publication Date: May 2, 2008
  • Sold by: Amazon Digital Services LLC
  • Language: English
  • ASIN: B003725GVG
  • Text-to-Speech: Enabled
  • X-Ray:
  • Word Wise: Enabled
  • Lending: Enabled
  • Enhanced Typesetting: Not Enabled
  • Amazon Best Sellers Rank: #399,421 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Customer Reviews

Top Customer Reviews

Format: Hardcover
I came across this book years ago in a bookstore, browsed through it, and put it away. Being caught up in the study of technical analysis at the time, I clearly wasn't ready at the time to find value (pun intended) in Staley's fundamental approach to the market. This time, however, I'm listening to her.
With a bit more experience, I can appreciate 3 of the many lessons _The Art of Short Selling_ teaches:
1) Fundamentals drive market action...eventually
2) It is often a costly mistake to short a stock simply because it apepars overvalued. A catalyst of some sort is needed to encourage massive selling.
3) Markets can ignore negative fundamentals for significantly extended periods of time--giving the astute trader ample time to sell at a profit, or even turn and sell short. Positive fundamentals are more rapidly incorporated into stock prices, but significant inefficiencies still exist on both sides of the market--long and short.
The author uses case histories of significant corporate failures from the 80's and early 90's in light of the publicly available info at that time, which clearly demonstrated the inivetable fall of Wall Street's institutional favorites.
Numerous fundamental techniques are discussed, such as tracking changes in inventory and receivables, as well as tricks companies play to make revenues and earnings appear better than they are.
Also interesting--a high short interest ratio in a stock is often a significant sign of potential trouble in a company. Do not let those analysts lead you to believe a high short interest ratio is always bullish. Check the fundamentals and make your own call.
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Format: Hardcover
Staley presents a thorough examination of the process of selecting
companies for shorting. While Joseph Walker's book, "Selling
Short" gives us the nitty-gritty details of the shorting transaction,
Staley gives us the reasons for going short in the first place. She
covers in fair detail the nature of short sellers and why some
are successful while others are not. The majority of the book is
comprised of case studies, written in the folksy style one finds
on Wall Street Week (TV show) or in books like "The Motley Fool".
Unlike "The Motley Fool" this book presumes at least a basic
understanding of accounting and knowledge of financial statements.
My one criticism of the book is common to many others in this genre;
that being nobody edits these books (or, if they do, it is by running
the "Spell Check" function on the word processor). Sometimes the folksy
banter and financial slang is so thick it gets confusing. Nonetheless,
this book is a must read if you are considering becoming a short seller;
if for no other reason that it may save you a great deal of heartache
and financial loss by convincing you that shorting is not for you.
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Format: Hardcover
This book offers an excellent introduction, explanation and overview of short selling as well as success stories. There is no doubt that short selling should be an integral part of any market participant's strategy. However, if you are looking for a reference explaining how to apply technical analysis to the identification of overvalued stocks, then this book falls short.
I cannot blame the author for heavily emphasizing the psychological aspect of short selling as too much enthusiasm, confidence and greed are mostly what drive up a stock's price to unreasonable valuations. Likewise, when the "castles in the air" disappear, the stock's price normally plummets and creates a very profitable opportunity for short sellers. It is critical to recognize when these stages are at their peaks and Ms. Staley does provide tell tale signs.
I think this book has something to offer all investors. Whether or not it is found to be helpful largely depends on the individuals investment strategy and what tools he relies upon.
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Format: Hardcover
Chapter Six of Kathryn F. Staley's excellent book is titled, "If You Can't Read It, Short It." In it she explains something called iceberg phenomena: "If you find five or six serious questions in financial statements, you can be sure that there are many more you cannot see." She's dead right.

My analysis is to go long this well-written (but very poorly proofread) introduction to the specialized realm of shorting equities. Ms Staley has chosen a style well-suited to the non-expert, rather breezily taking the reader through the balance sheet shenanigans, distribution channel stuffing and other tricks CEOs and corporate directors use to puff up share price and get option grants into the money before taking the next Gulfsteam outta Dodge.

The book is chock-full of entertaining examples of games CEOs and their pliant Boards try to play with shareholders' money. Don't let Ms Staley's light-hearted style fool you. This is very serious business, and she's got years of success in the trenches to bolster her credibility as a writer on this topic.

Reading The Art of Short Selling also reminds even experienced practitioners of financial statement analysis that a 1OK is often an attempt to put a wedding dress on a dog in order to pretty it up for the next financing. I feel obliged to point out that this review is being written during earnings season, and it never ceases to amaze one when supposedly objective analysts are heard on conference calls being cheerleaders for company managements obviously in need of good thrashing.

Kathryn Staley is not unknown to the community of financial analysts. She was profiled as being among the most innovative of analysts in a recent issue of CFA Magazine.
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