Short Squeezes Have No Appeal

The more I write about shorting , the more people seem to want to know about it. I thought I had answered most questions with last night's primer, but shorting has a sort of mystical, almost conspiratorial hold on some readers, so I think that the demystification of this age-old process makes a ton of sense.

In particular, people want to know when they can spot short squeezes. Yesterday, for example, when I said that Linux-related stocks couldn't be borrowed, people immediately wanted to know, well heck, if they can't be borrowed, why not participate in the short squeeze? Why not join the gang-tackle and go up with them? Why not pile on and get rich?

Oh boy, is that wrong.

One of the more amazing things about this business is that it is actually based on something. There is a core set of beliefs out there that professionals virtually have to believe in if they are going to do their jobs with any longevity. And one of them is not buying stocks because you think they are overly shorted. ...