Why you should never short a share12 Sep 2020 22:13
When you “go long,” your maximum possible loss is 100%, or your entire initial investment. That can happen, for example, if a company goes bankrupt.
But if you have a short position, there’s no limit to how much money you can lose if the shares rise. If the share price increases soon after you place a short position, you could quickly “cover” by buying back the shares and returning them to the investor you borrowed them from. If you’re lucky, you might not lose very much.
But an investor named Joe Campbell was not so lucky when he placed a $37,000 short position on KaloBios Pharmaceuticals Inc. in 2015 . US:KBIO only to find out a day later that the shares had shot up about 800% after Turing Pharmaceuticals CEO Martin Shkreli gained control of a majority of KaloBios’ shares.
Campbell pleaded for assistance, saying he might have to cash in his and his wife’s 401(k) to cover his position, since his broker was unable to react quickly enough to close out the trade when his account balance was wiped out. But he received little sympathy from other investors, as he thought he was right they would drop , extremely risky basically life changing in 24 hours , proving until it is a rns no one knows . whatever they say