The high risk of “dumb money” with which amateur investors “play with fire” on a daily basis
Many online buyers have turned to short selling as an “easy” way to make money but have found investing more difficult than they thought.
In 2025, we’re continually told there are thousands of ways to make a quick buck without exerting too much effort. Realistically, however, that is rarely the case, and tales are many of those who have found out the hard way.
What is short selling? How does it work?
That includes no shortage of amateur investors who have tried their hand at short selling, defined by Investopedia as “a strategy where traders profit from a decline in the price of an asset, often a stock”.
The idea is that the investor borrows shares of a stock in the expectation the price will drop. The goal is to sell before said drop takes place, and later buy them back at the lower price.
A simple example: if you have 10 shares and sell them for $10 each, you’ll make $100. You wait for the price to drop and buy them back for $5 each, which is a total of $50. You get your 10 shares back and have $50 left over.
Sounds simple, right? Unfortunately, predicting the market isn’t as straightforward as that (and the example doesn’t include the initial investment).
Advocates of the strategy claim it plays an important role in the market by helping establish the real value of an asset, and can root out fraudulent behaviour when prices are inflated.
Financial expert warns against short selling
But according to financial expert Pete Roscoe, who has a YouTube channel on the topic, the average amateur would have as much chance of making money in a casino.
“Unless you can dedicate four or five hours a day, Monday through Friday, just watching the market, simply observing how these stocks go up and down for six months, you won’t stand a chance,” Roscoe warns. “And by the way, even after that, you’re very likely to fail.
“If we analyzed my first 100 short sales, I’d probably say I won 30% and lost 70%. You’ll be wrong many times.”
Short selling, dubbed “playing with fire” by many, was the focus of 2023 biographic comedy drama “Dumb Money,” featuring an ensemble cast including Paul Dano, Pete Davidson and Seth Rogen. The movie chronicles the short squeeze of stock of video game retailer GameStop and the subsequent attempts of amateur online buyers to make money by short selling.
Without wanting to give too much away, you can probably imagine from the title of the movie how things went…
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