Pros of going short
- Gives you a way to profit when a stock or market declines in value.
Cons of going short
- Doesn’t give you an ownership stake in the business.
- Losses are theoretically unlimited since a stock can keep rising.
- Must have a margin account to go short.
- Ongoing fees include margin interest expense and a stock’s cost of borrow.
- Must pay any cash dividends paid by the short stock.