Market Term - Cats and Dogs

Cats and Dogs in a stock market refer to those stocks with shady background. These companies would have bad records in the past be it earnings, dividends or would have involved in some illegal activity.

Short sell it !

Short selling is a very interesting concept in the stock market. It basically lets you make money even when you are in bear market. Before we move further, this is only for traders and not for long term investors. So, if you have a great risk appetite, read on !

Short selling works like this, for example - Reliance stock now has been suffering because Dhirubhai's kids are quarelling for 90000 crores. Now, you know that the stock has very limited upmove and whenever one of the kids starts uttering something, the group stocks go down. However you know that the stocks will recover soon enough. So, what you short sell it , you actually aren't buying a stock, but borrowing it from a investor who thinks long term or a broker who has it in his inventory. If the stock price falls, you can buy back the stock at the lower price and make profit on it. If the stock price rises, you have to buy and give the shares back to your broker and hence you lose money.

Short selling is for people who speculate and for people who hedge. We all know what is speculation, hedging is where you sit on the fence and short as well as go long so that if the market moves the other way, you still are safe because you are shorted.