Bruce Greenwald on Shorting

Below is a link to an interview by John Authers with the legendary value investor and professor Bruce Greenwald. He is asked whether shorting very expensive stocks is a natural complement to going long deep value, a la Ben Graham.

If someone asks you about the risks associated with shorting, you’ll probably respond with the standard answer about unlimited downside potential, or the swimming against the stream aspect of markets having tended to go up in the long term.

But Greenwald also makes the point that the more a short position moves against you, the larger the part of your portfolio it becomes. In hindsight that’s an obvious attribute of unlimited downside potential, but I actually never quite connected the dots!

I’d love to attend his 2-day course but the $5200 price tag is more than most spend on the entire tuition for the CFA program.

Looks like a copy of his book is included, which I plan to buy anyway, so make that $5180. Breakfast and lunch are included too, which I’d have to eat regardless, so that drops it to $5140…

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