Don't short on high valuation alone, says new book
18 October 2013 Massachusetts
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A new book aims to illustrate how successful short investment theses are not based on the premise of high valuations, but rather on the problems with a company鈥檚 business model and its accounting practices.
鈥楽hort Stories from the Stock Market鈥� uses case studies to illustrate the short selling framework in practice. It draws upon examples from past research by Artham Capital Partners as well as research contributed by Off Wall Street, a short-focused independent research firm, based in Cambridge, MA.
Authored by Amit Kumar, who started Artham Capital Partners in 2009 after working as a buy-side analyst at Swiss Re, the book aims to prove that while buying low and selling high usually works for long ideas, short selling expensive stocks based on high valuation alone usually does not work as well.
Marc Faber, author and publisher of The Gloom Bloom Doom Report, famous for his contrarian approach to investing, said of the book: "If there is value in buying undervalued stocks, there must be value in selling short over-priced stocks.鈥�
鈥淎s a short seller, I have to say that the problem with shorting stocks is that the most ludicrously overpriced stocks (like technology stocks in 1999) may become even more overpriced before they collapse. Still, Kumar鈥檚 book is an excellent introduction into the controversial strategy of selling short stocks of companies whose fundamentals are likely to deteriorate."
鈥楽hort Stories from the Stock Market鈥� uses case studies to illustrate the short selling framework in practice. It draws upon examples from past research by Artham Capital Partners as well as research contributed by Off Wall Street, a short-focused independent research firm, based in Cambridge, MA.
Authored by Amit Kumar, who started Artham Capital Partners in 2009 after working as a buy-side analyst at Swiss Re, the book aims to prove that while buying low and selling high usually works for long ideas, short selling expensive stocks based on high valuation alone usually does not work as well.
Marc Faber, author and publisher of The Gloom Bloom Doom Report, famous for his contrarian approach to investing, said of the book: "If there is value in buying undervalued stocks, there must be value in selling short over-priced stocks.鈥�
鈥淎s a short seller, I have to say that the problem with shorting stocks is that the most ludicrously overpriced stocks (like technology stocks in 1999) may become even more overpriced before they collapse. Still, Kumar鈥檚 book is an excellent introduction into the controversial strategy of selling short stocks of companies whose fundamentals are likely to deteriorate."
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