Wednesday, May 10, 2006

Warren Buffett on Naked Short Selling

"There’s nothing evil about short-selling. But it’s a tough way to make a living. It’s tough emotionally. If you short a stock at $20, the most you can make is $20, but there’s no limit to how much you can lose. People on the short side will do and say things to try to get their positions to fall; people on the long side do, too. Some of the things they do may be inappropriate," said Warren Buffett.

"Historically, a lot of stocks that have high short interest are later shown to be frauds or semi-frauds. I’ve had 100 ideas to be short, and have often been right—eventually, but long after I’ve covered, and the stocks have risen a lot. The people who run those companies tend to be good at keeping their stock prices up," said Warren Buffett.

"Being short stocks is a tough psychological game. I’d never put money in a short fund," said Warren Buffett.

Berkshire Hathaway Annual General Meeting May 6, 2006

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