If you need further evidence on how dangerous shorting is, even for something that everyone thinks will go down, consider the "Widowmaker" bond trade. Essentia

If you need further evidence on how dangerous shorting is, even for something that everyone thinks will go down, consider the "Widowmaker" bond trade. Essentially, most traders agree that the Japanese Government (JG) will have to soon increase the yield of their new bonds (which have historically been very low) because of Japan's huge and growing national debt (200% of GDP) and the slowly increasing risk of defaulting. Once this happens, the value of the current bonds in the market will drop because who wants to buy bonds with a lower yield at the same price? After the Fukushima disaster, investors thought for sure that the JG would increase yield to get more money to repair infrastructure, deal with a weakened economy, etc. Many, many hedge fund managers have shorted Japanese bonds and all of them have lost money. Yet, the idea persists and every day, traders are shorting JG bonds, convinced that it can't stay low forever. No doubt, one day it will pay off, but will you be the lucky one to cash in? Unlikely.