As a general rule of thumb, speculators enjoy a greater potential to profit from the downfall of a publicly traded enterprise than on the upside. Although shorting is a controversial tactic, it can benefit from the intense, emotional reactions associated with extreme pessimism. In an avalanche of red ink, people are worried about salvaging their wealth, not about scoring a few points in a pickup match.
With greater stakes involved, it’s no wonder why certain traders look for bearish opportunities, so to speak. However, finding such ideas can be a challenge. A key risk associated with the short side of the spectrum is that the market tends to have an upward bias. Further, the popularized concept of the short squeeze has made becoming a professional bear a rather dangerous occupation.
