Short Selling Cartoon (Election 2016)

Election 2016 result and market reaction cartoon

Most of the media predicted a downfall in the stock market if Trump won, but Dow Jones hit all time high after Trump Victory. I wonder if there were many shortsellers.
I don’t do short selling (too scared) but I bought one gold stock.  My gold stock didn’t go up at all, it actually fell down a bit.  Short selling is motivated by the belief that a security’s price will decline, enabling it to be bought back at a lower price to make a profit (from Investopedia).  So if you thought Trump would win and that market would tank (since it’s not the status quo anymore) you may have short sold and your reaction would be like the above cartoon…because short selling wants the market to tank. That way they can buy back stocks for cheap and return them. BUT it comes with a lot of risk, because the sky is the limit in terms of stock price. You have to eventually buy back a stock you short sold, so if price keeps going up, that makes the short sellers react like the above cartoon.

 

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