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The Equitymaster Research Digest

Is Trading and Value Investing a Good Combination?
Jun 17, 2016

  • The best time to short sell
  • An alternative to short-term trading
  • Ankit's new obsession

'It's easier to find short ideas when a bull market goes on.'

It's not a value investor saying this. It's the famed short seller, James Chanos.

For a short seller, there's no better market than a bull market to find profit-making opportunities.

After all, people are so drunk with euphoria that not only do managements take imprudent risks, but valuations become overvalued and ripe for a big correction.

Benjamin Graham said, 'The chief losses to investors come from the purchase of low-quality securities at times of favourable business conditions.'

Indeed.

A market that's good for a short seller cannot be good for a fundamental long-term investor and vice versa.

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