Short selling is extremely dangerous, and many a fund in history (the greatest funds in history) have been wiped out by one short mistake. Here’s why.
When you are long a position, and the position goes against you, you have time on your side and can ride out the crisis (as long as no leverage is involved). But shorting a market is different. In the long term, you may be right to short a market, but a fatal mistake in the short term is FATAL. Timing is everything when starting a short position. For example, if you shorted a stock at $50 per share, and you have $50 left in your investment account. Within a month, that stock rises to $100. You’re completely wiped out. But after half a year, that stock falls to $30. In the long term you were right to short the stock, but timing killed you. And trust me, it’s very hard to get your timing right every time. One mistake in shorting a market can be fatal.
Here’s my article on why shorting a market that is in a bubble is extremelyyyyyyyy dangerous.