Should You Bet Against A Stock At Some Point?

Not everyone loses when the stock market goes downPeople invest their money into the stock market hoping to see their money appreciate. Sometimes that money appreciation happens immediately, but most of the time appreciation is seen over the long-term, and small 1–2% increases that feel unnoticeable now can become quite noticeable in a few months if your portfolio has an upward trend.Most people invest in the stock market through stock purchases. They buy some shares of their favorite companies and hold onto them for a certain amount of time. Some people sell at the wrong time, others hold the wrong companies, and other people hold onto the right companies that continue to experience growth.Along the way, there will be turbulence. Your investments will decrease in value on certain days, and you might even have a week long losing streak. It happens.But what if you could mitigate the downside and even make a profit when the stock market goes down? This is actually possible by betting against stocks.The three common ways to bet against stocks are to short a stock, buy puts, and sell a covered call if you already own 100 shares of the stock. Shorting stocks and trading options are riskier investing strategies if you don’t know what you’re doing, so I’ll shed some light on both strategies.When you short a stock, you essentially borrow shares of a company and proceed to sell those shares. You get the proceeds from that sale which you can divert to other investments, but you sold shares that don’t belong to you.Eventually, you will have to buy those shares again to close out the short position. If you short a stock that’s currently priced at $100, and you buy it a few weeks later at $80, you make $20. In between that timeframe,…