Surprise: Short sellers fare well

July 10, 2008 | By Jim Kim

Dedicated short sellers--those who do nothing else--are something of a dying breed on Wall Street. There just aren't that many left. But there is more short selling going on than ever before, reflecting in part the rise of 130/30-type hedge funds and the near-bear market. Shorting right now is as challenging as ever; finding shares to borrow is often a real pain. However, so far this year, shorting has really paid off, notes Financial News Online. Hedge Fund Research's HFRI short bias index is up more than 12 percent for the year. In June, it was up 8.6 percent vs. an 8.7 percent decline for the S&P 500. You would have to think that popular short targets, like Bear Stearns and Lehman Brothers, played a role. But things will get tricky from here. Staying short will get you burned as bear markets end. We may be in for some rotation.

For more:
- here's the Financial News Online article