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Whitney Tilson’s Short Rules

Hedge fund giant Whitney Tilson of T2 made a name for himself shorting the home builders in the early stages of the housing crisis.

Considering selling short is tricky business - we wondered how he decideds when -- and when not -- to go short.

Here are some rules that Tilson lives by:

- Don't Short Good Businesses
- Even When They Have Extreme Valuations
- Don't Maintain A Large Short Book Post Crisis
- Long Investment Is A Better Business

Meanwhile Barry Ritholtz of Fusion IQ thinks that shorting a stock on valuations is a deadly trade.

Get all the details. Watch the video now.



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Trader disclosure: On Feb. 3, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Joe Terranova owns (VRTS), (C), (UPL), (GM), (PEP), (MS), (LTD), (CVI), (CVE), (SU), (CPX), (CNQ) and (POT). Guy Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE) and (BTU). Steve Cortes owns (SVU), (MO), (PM), (K), (SWY) and (EXC). Steve Cortes are long U.S. Treasuries. Steve Cortes is short (LVS). Steve Cortes is short Gold. Steve Cortes is short Crude. Karen Finerman owns (BAC), (AAPL), (BP), (C), (WMT), (MSFT), (JPM), (GOOG) and (HPQ).
Comcast is the parent company of CNBC
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GE owns 49% of NBCUniversal
GE owns 49% of CNBC
KAREN FINERMAN
Finerman's firm is short (MDY)
Finerman's firm is short (SPY)
Finerman's firm is short (IWM)
Finerman's firm is short (IJR)
Finerman's firm is long S&P puts
Finerman's firm is long Russell 2000 puts
Finerman's firm owns (AAPL)
Finerman's firm owns (BAC) leaps
Finerman's firm owns (BP)
Finerman's firm owns (FCX) puts
Finerman's firm owns (HPQ)
Finerman's firm owns (IBM)
Finerman's firm owns (JPM) and (JPM) leaps
Finerman's firm owns (MSFT)
Finerman's firm owns (PLCE) and (PLCE) calls
JOE TERRANOVA
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LPHI)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (DPUKF)

GUY ADAMI
Adami's wife works for (MRK)
BRIAN KELLY
Accounts Managed By Kanundrum Capital Own (YGE)
Accounts Managed By Kanundrum Capital Own (TLT)
Accounts Managed By Kanundrum Capital Own (IAU)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (ATW)
Accounts Managed By Kanundrum Capital Own (BAC)
Accounts Managed By Kanundrum Capital Own (UAL)
Accounts Managed By Kanundrum Capital Own (DAL)
Accounts Managed By Kanundrum Capital Own (DBA)
Accounts Managed By Kanundrum Capital Own (JJG)
Accounts Managed By Kanundrum Capital Own (DO)
Accounts Managed By Kanundrum Capital Own (APA)
Accounts Managed By Kanundrum Capital Own (MS)
Accounts Managed By Kanundrum Capital Own (JEF)
Accounts Managed By Kanundrum Capital Own (MON)
Accounts Managed By Kanundrum Capital Are Short The Yen
Accounts Managed By Kanundrum Capital Are Short The Australian Dollar
BARRY RITHOLTZ
Ritholtz has no disclosures
ANDY BUSCH
Busch has no disclosures
ANTHONY SCARAMUCCI
Scaramucci and SkyBridge Capital own (V)
CHRISTOPHER VERRONE
Verrone has no disclosures
BRIAN STUTLAND
Stutland owns (CSCO), is short (CSCO) calls
GORDON JOHNSON
Johnson has no disclosures
FAST FIRE 12/21/2010
Guy Adami had no disclosure in (JEF) on 12/21/2010

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