In a market correction or crash, one of the favorite boogie-man to blame is the short- seller… Even governments blame them and try to change the rules as we go along. That’s lame. If short-selling is “bad”, then ban it altogether! Not when it suits the governments or regulators. Keep your friends near, but keep your enemies closer! In a trade, there is a buy and there is a sell. Both are same sides of the same coin. Long only decision making can be limiting in the sense it creates a bias in our perception and analysis – the glass is always half-full. If we pause for a moment and ask ourselves – the stock I am thinking of buying, is it a great candidate for short sellers? Perhaps the glass is more half-empty!? For e.g., would you want buy at a technical price resistance level that short-sellers are establishing their new positions? Or would you wait till the price breaks through this resistance and buy into the momentum? Short-sellers covering their shorts (wrong bets) are now providing the wind behind our sails. How is that for support? Or if you are more a bottom fisher, would you feel more secured that you are buying at a price no short-sellers would dare to establish a new short position? In fact, short-sellers taking profits on their short trades are good buying indicators! I use short-sellers as the canary in the coal mine. As I am at the bottom of the information hierarchy, if I find my canary is dead (price hit my 10% cut-loss point), I don’t ask questions. I just get out of the mine! In my view, short-sellers are doing the “job” of the regulators. Just take the recent China stock fraud cases uncovered by the short-sellers in US – muddy waters and co… That means if I have stuck with my cut-loss plan, the max loss for me is 10%. Who likes to take a loss? But look at it this way. Would you prefer to have no “price destruction” and out-of-the-blue, the S-chip that you owned is suspended by SGX for accounting irregularities? Then months later the S-chip is de-listed with 100% loss? If it’s a mental block to “respect” the role short-sellers play, I have one tip: See them as fellow vested shareholders who are dumping their shares. (Does it really matter they are selling shares they don’t own?) To quote one Createwealth8888 saying that I like a lot: our car’s GPS signal turn left, we turn left. But when the same GPS signal we turn right, we question the GPS… LOL! Singapore Man of Leisure (welcome to my blog; just google it!) This post was written by a guest contributor. Please see their details in the post above. If you'd like to guest post for TheFinance.sg, feel free to contact me for details about how YOU can share your tips and knowledge with our community.