The following is one of the nine chapters that were cut from my book, “Guide to Investing in Gold and Silver”, back in 2007. The book was originally 800 pages, but the editors cut 600 of them, and those pages haven’t seen the light of day since… until now.
This chapter was intended to teach a novice investor the power of a short squeeze. In it I mention Lehman Brothers. I was tempted to update it but decided to leave it as originally written. It’s a very short, but I hope entertaining, read.
Don’t Get Caught With Your Shorts Down
By Mike Maloney
This is the story of an epic “short squeeze”. In the investing game most people try to buy low then sell high. But to make a profit the price has to go up. What we are going to look at here is how a trader can try to make money when they expect the price to go down. The most common way is by short selling (shorting).