[eastbay]

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What I'm trying to grasp is a more theoretical concept of what happens when you take a long position on a random stock vs taking a random short position. In the first case, you are giving up the use of funds to get a return, much like a CD or bond. But since the risk is higher, your returns are better. When you short, it's as if you're the one taking out a loan, but now you're paying the high-interest (market return) that the loaner only recieves because of the risk he takes on. And yet, you take on this same risk. To me that doesn't make sense.

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Of course not. Shorting a stock randomly is idiotic.

This is like saying "moving all-in with 52o doesn't make sense to me." Of course it doesn't make sense as something you would do randomly. But it can be a winning play if the context is right. Just like shorting can be a winning play if the context is right.

eastbay