This column originally appeared on Real Money Pro at 8:36 a.m. EDT on Oct. 8.
NEW YORK (Real Money) -- With what seems to be under the guise of sound twenty-first century central banking, the Fed's policy of providing ever more easing through the manipulation of interest rates and even possibly aiming at raising asset prices (such as equities), I continue to hear the following objections from many investors and traders:
- Why bother selling short?
- Isn't short selling a mug's game?
- when economies stumble, public policy (fiscal and monetary) comes to the fore and defends against an acceleration of economic and corporate profit weakness and often inhibits natural price discovery;
- risk and reward are asymmetric in short selling;
- the historic average annual positive return for equities is an insurmountable headwind; and
- the exercise of selling short is analytically time-consuming -- long ideas are dished out on a silver platter by Wall Street's research departments and are usually confirmed by management, which is not true of shorts.
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