The short financial market, which has thrived in the past year, is quickly dropping from a big-time moneymaker to a risky bet at best. Investment experts say the uncertainty of the market’s future makes selling short less attractive than in the past.

Selling short is selling stock that you do not own through a broker, then when the price drops, buying that stock back and keeping the profits.

“Basically, you sell Stock ‘X’ today at 100 and if it drops down to 90 you buy it back and make 10 bucks,” said Joel Morse, a University of Baltimore finance professor.

The window of opportunity to take advantage of plummeting stock prices has pretty much come to an end, Morse added.

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Larry Adam, chief investment strategist at Deustch Bank, also advised against putting all your eggs in the short basket at this point. He said the safest way to take advantage of dropping market prices was through a hedge fund that balances short- and long-term investments to eliminate risks.

Adam also said that the overabundance of short-sellers will quickly add to buying power if prices begin to rise rather than fall. This will help build momentum when improvements start — something that Adam expects to see in the near future.

Not every one is so optimistic about the market’s future. University of Maryland business professor Peter Morici said that mismanagement on Wall Street, along with the government’s inability to step in and institute reforms, leaves the economy in a deeper hole than many think.

“I have as much confidence in President Bush and [Federal Reserve Chairman Ben] Bernanke as I would in a chimpanzee sitting in front of a typewriter trying to write the great American novel,” Morici said.

He also has little faith for those in charge of the major players in New York, such as Citigroup, Merrill Lynch and Goldman Sachs, saying they have “the credibility of a carnival huckster.”

Despite his lack of trust in the powers that be, Morici said while those who decided to sell short would have a strong foundation to defend their actions, he wouldn’t necessarily recommend doing so at this time.

dan.murphy@baltimoreexaminer.com