Lessons From Warren Buffett

Lessons From Warren Buffett: Shorting Stocks, It Just Takes One to Kill You

Warren Buffett is no fan of shorting stocks. His aversion goes back to what he called a “particularly harrowing experience” shorting in 1954 when he found “my net worth was evaporating and my liquid assets were getting less liquid.”

“It just takes one to kill you,” Warren Buffett warned at the 2002 Berkshire Hathaway Annual Meeting. “And you need more and more money as the stock goes up. You don’t need more and more money when a stock goes down, if you paid for it originally and didn’t buy it on margin. You just sit and find out whether you were right or not. But you can’t necessarily sit and find out whether you’re right on being short a stock.”

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