Short Selling, Profit Protection, Chowder Rule: You Need to Know

Easy solutions can involve serious risks. Here’s what to consider before doing Short Selling, Profit Protection, and the Chowder Rule.

You’ll Learn

Short selling occurs when an investor borrows a security, sells it on the open market, and expects to repurchase it for less money.
Why would an investor short-sell its shares? What are the benefits?
The risks of this strategy are real and investors could lose a lot of money!
Sometimes, an expert issues a short report that can create a lot of doubt in investors’ minds. A good example would be the recent one on Brookfield. What was the impact, and should investors follow such reports?
Profit protection, also known as profit preservation or risk management, refers to investors selling their shares to safeguard existing profits or limit potential losses. Is this a good reason to sell, and why?
What could investors do instead?
It seems like short-selling and profit protection both evolve around the speculation, which you try to avoid. Why is it dangerous to speculate for investors?
Now, let’s discuss the Chowder Rule, which many members use at Dividend Stocks Rock. What is it?
Which minimum Chowder Score should investors aim at?
The Chowder Rule is interesting for finding a balance between dividend yield and growth. But are there any disadvantages to using it?
Mike ends the episode by adding a warning about easy solutions and the fact that there is no shortcut to be a successful investor.