Short Selling: Strategies, Risks, and Rewards


  • Pages: 430
  • Format: PDF
  • Published Date: 2004


Short Selling: Strategies, Risks, and Rewards provides the most recent theory and empirical evidence on the practice of short selling. The chapters in this book, contributed by leading practitioners and academics, explain not just the complex mechanics of short selling and the associated risks, but also why some stocks can be expected to become overpriced, strategies for exploiting overpricing, and how short selling can improve portfolio performance and market efficiency.


That brings us to this book, which is something special. It is not a coincidence that this book wasn’t published in late 2002/early 2003 when so many hastily scribed, rush-job books on shorting came out at the nadir of a bear market. These works were light on the content, and heavy on the “You too Can Get Rich by Shorting” sentiments, generally including a couple of “if you had only shorted blank at blank price you would have made blank by now.”

This book is different. The quality of the authors, a collection of learned and respected academics and practitioners, speaks to that, as does the coverage, scope, and seriousness of the topics.

This is not about getting rich quickly. It is about how shorting works, what short sellers actually do, how shorts uncover the overvalued and the true ponzi schemes, economically why short selling is important, the true impediments to shorting, and a host of other sober, vital, and often neglected topics.

It is not just about the canonical shortonly manager uncovering fraud and overvaluation as implicitly described above, it is also a detailed description of how shorting can be part of an overall optimal portfolio, and can be pursued in all different forms with all different types of managers (a systematic market-neutral manager, a generally long manager who uses shorts to reduce risk and hopefully add alpha, or a truly dedicated short manger).


  • The Mechanics of Short Selling
  • Theory and Evidence on Short Selling
  • Short Selling Strategies
  • Short Selling and Market Efficiency