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MARKET COMMENT
By
Carburton Street, London -- The stock market has provided rich pickings for the short seller over the past two years. A casual glance at the Motley Fool's discussion boards shows just about everybody is busy shorting troubled tech companies. Yesterday's profit warning from telecom firm Energis (LSE: EGS) -- causing the shares to fall nearly 70% -- showed the possible rewards from this strategy. But if you're riding the tech shorting bandwagon at the moment, ask yourself this question: Do you have the talent to regularly make money from shorting in the years ahead? Consider recent stock market history. There was the TMT bubble, where countless technology companies soared in value as investors fantasised over perpetual profit growth. Then there was the fallout, as the dreams of growth vanished to leave only rapidly diminishing cash piles or large mountains of debt. While there have been great stock market booms and busts in the past, they are by no means frequent occurrences. You have to go back to 1973-4 for the last time the UK stock market fell on greater scale than it has since January 2000. And with those somewhat exceptional stock market circumstances of late, there's every chance today's successful shorters are actually confusing luck with skill. In reality, a monkey throwing darts at a list of TMT companies could have made money by shorting. And when the dart-throwing monkeys are doing well on the stock market, you know the game is near the end. Successfully shorting tech shares cannot go on forever. Without doubt, the best gains to be had from shorting have already been taken. And while there's every chance of further downside as the likes of Energis and the rest head towards bankruptcy, tech shorters will have to ask "what next?" at some point. The next bursting of a stock market bubble may be a decade away.