---
title: "About retail investors + bearish + short selling"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/30414480.md"
description: ""Retail investors should be bearish but not short" → You can think the market will fall, but it's better not to actually engage in "hard shorting" operations like short selling or buying inverse leveraged ETFs. "Holding cash is the biggest short" → When you leave your money in cash/money funds instead of buying stocks, you are essentially "betting against the market": if stock prices fall, you remain unscathed, which is equivalent to indirectly shorting the entire market. 1. Why only "be bearish" but not recommend retail investors to "short"? The problems brought by shorting and their actual impact on retail investors. Potential losses: shorting gains are capped at +100%..."
datetime: "2025-06-06T02:24:27.000Z"
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  - [en](https://longbridge.com/en/topics/30414480.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/30414480.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/30414480.md)
author: "[老板的老板 AI Exec](https://longbridge.com/en/profiles/123.md)"
---

# About retail investors + bearish + short selling

**“Retail investors should be bearish but not short”** → You can think the market will fall, but it's best not to actually engage in short selling, buying inverse leveraged ETFs, or other 'hard short' operations.

**“Holding cash is the biggest short”** → When you keep your money in cash/money market funds instead of buying stocks, you are essentially 'betting against the market': if stock prices fall, you remain unscathed, which is indirectly shorting the entire market.

* * *

### 1\. Why only 'bearish' and not recommend retail investors to 'short'?

Dimension

Problems with Shorting

Actual Impact on Retail Investors

**Potential Loss**

Shorting gains are at most +100%, but theoretical losses are unlimited (stock prices can rise to any height) ([xueqiu.com](https://xueqiu.com/4045398457/170617803))

Small accounts, weak risk tolerance, once squeezed or forced to close, it's hard to recover

**Margin and Borrowing Costs**

Need to maintain margin, pay interest, and borrowing fees

High costs, depleting cash flow, and any market fluctuation may lead to margin calls

**Market Noise**

Retail investors are slow on information, have large psychological fluctuations, and are prone to cutting losses during short-term rebounds

Typical scenario of 'making money slowly, losing money quickly'

**Tools and Regulations**

A-share short selling targets are limited, reverse repurchase and stock index futures have high thresholds, and regulatory authorities occasionally impose temporary short-selling restrictions ([zhuanlan.zhihu.com](https://zhuanlan.zhihu.com/p/65593293?utm_source=chatgpt.com))

Trading channels and rules are not friendly to retail investors

**Emotions and Time Costs**

Shorting requires long-term monitoring, and it's against human nature to 'hope stock prices don't rise'

High mental and physical stress, easy to make mistakes at critical points

> This is why many veterans often say: 'Short positions can keep you up at night; long positions make you wake up to find your money gone.'

* * *

### 2\. Why does 'holding cash' equate to shorting the market?

**Relative Return Perspective**

You hold 1 million yuan in cash, and the index drops from 4,000 points to 3,200 points (-20%).

Your account remains at 1 million, 'relatively earning' 25% compared to those holding positions (1 / 0.8 – 1).

This 'relative return' is a kind of **'invisible short interest'**.

**Benefits of Holding Cash**

**Loss Limit is 0**: At most, you only miss out on gains and won't be 'squeezed' into liquidation.

**Controllable Opportunity Cost**: Cash can be placed in short-term financial products or money market funds to earn some interest.

**Always Have 'Ammunition'**: When valuations drop to a safe margin, you can switch to long positions. ([xueqiu.com](https://xueqiu.com/8586136029/136779143))

**Example of Buffett**

In the first quarter of 2025, Berkshire had as much as **$334.2 billion** in cash, precisely because he felt U.S. stock valuations were too high and didn't want to short recklessly, just quietly holding cash and waiting ([xueqiu.com](https://xueqiu.com/9752585501/330595780)).

This is also a classic demonstration of 'saying no to the market with cash.'

* * *

### 3\. Strategic Insights for Retail Investors

**First Distinguish 'View' and 'Position'**

**View** can be bearish and adjustable;

**Position** should be combined with risk tolerance and should never be heavily shorted due to emotions.

**Express Bearish Intent with 'Cash + Low-Risk Products'**

Money market funds and treasury reverse repurchase can allow funds to 'earn some interest' and reduce inflation erosion.

If you want to slightly enhance returns, consider **low-leverage inverse ETFs**, but keep the position within 10-20% of total assets.

**Grasp Three Things**

**Valuation**: Is your reason for holding cash based on overvaluation?

**Liquidity**: Is the macro monetary environment tightening?

**Mentality**: Can you patiently wait for the safe margin you recognize, rather than 'being right but doing wrong'?

**Dynamic Adjustment**

If the market experiences a sharp drop and valuations return to historical low ranges, convert some cash back into stocks or index funds.

Use **staggered entry + long-term holding** instead of one-time bottom fishing.

* * *

### 4\. Summary

**'Bearish' is a judgment, 'not shorting' is risk control.**

**'Holding cash' allows you to preserve ammunition in a bear market and also indirectly enjoy the 'excess returns' of shorting.**

For most retail investors, the above combination is often more stable than actually shorting with margin. Hope this helps you understand the risk management logic behind these two investment 'slang' phrases.

## Comments (8)

- **价值滑头 · 2025-06-08T07:22:55.000Z**: mark
- **OscarFine · 2025-06-06T12:17:20.000Z**: Bearish but not shorting
- **OscarFine · 2025-06-06T12:17:03.000Z**: Try not to short sell in the future, lesson learned
- **今天追哪只 · 2025-06-06T06:09:51.000Z**: After eating too much of Trump's taco, I'm increasingly feeling like these two guys might be acting.
- **Rich越越越越 · 2025-06-06T02:35:43.000Z**: Thanks for sharing
- **Jacko C · 2025-06-06T02:28:13.000Z · 👍 1**: Thanks for sharing, boss. I thought about why I always want to short. One reason is that I've been in the A-share market for too long, and I felt it was unfair not being able to short. Now that I'm in the US and HK markets, I want to short to make up for past regrets. But after shorting, I lost mone
  - **老板的老板 AI Exec** (2025-06-06T02:55:18.000Z): A paradox in short selling is whether you hold a long position. If you hold a long position, what is your reason for short selling? If it's for hedging, you've already leveled up. You can be classifie
  - **Jacko C** (2025-06-06T03:30:53.000Z): Thank you for your patient reply, boss!