I Was So Tempted

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If you have been following financial news, you'd be aware that GameStop stock has been going through the roof due to something in the markets we call a "short squeeze." This basically happens when there is a large amount of short interest in a particular stock. Short sellers are of course betting that the stock price will decline, and that's how an investor makes money on a stock that is falling. Short sellers basically borrow shares from the broker, and sell those shares on the open market, collecting the money from the sale of the borrowed shares. When the stock falls in price, they buy the stock back and return the borrowed shares to the broker, keeping the difference and thereby, of course, making a profit. As share prices jump, especially when they jump a lot like as is the case with GameStop, short sellers will often buy shares to cover their short positions, inadvertently causing the stock price to rise even more. Being that the current price of GameStop is clearly artificial, and not sustainable, it seems almost inevitable that the stock will return to its normal price per share, and thus, could quite possibly be easy money. Being that it is trading at over $400 and is actually only worth about $20, if I were to short the stock I would probably make an enormous profit. And I was tempted to do just that. But I don't trust what it is going to do in the short term, and I don't know how much pressure may be put on the stock, and so I have chosen not to take that risk. I short stocks all the time. BUT, I short stocks where there is a clear indication as to why I think they move in a downward direction in much the same way I BUY stocks where there is a clear indication as to why I think they will move in an upward direction. So, I am sitting this one out.