Seven Reasons to Sell Stocks Short

With all that’s going on, would you believe the market, as measured by the S&P 500 index, is only 4% off its high? Some folks interpret this fact as investors “shrugging off” bad developments, looking ahead to some unseen, glorious future that none of us individually can imagine.

But the “wisdom of crowds” is overrated. I see an epidemic of denial — denial at a level last seen near the 2007 market peak, when central bank policy was thought to be propping up stock prices. That denial didn’t end well.

Psychology and sentiment are important in markets, but not as important as overwhelming negative evidence, including the following seven reasons to remain bearish (the reasons to be bullish are well-known among institutional investors who have nervous clients’ money fully invested): (more)