Why so long?

Readers of my Better Spread Betting, Position Trading and Stop Orders books will know that I am predominantly a long trader; and some of you might be wondering why. It’s not for any moral reasons (e.g. “short selling is bad”) but for the following reasons:

  1. In the long run, stock markets generally rise, but I wouldn’t read too much into this.
  2. In the long run, long equity positions pay dividends, though not very many at the moment.
  3. In the current low interest rate environment, the cost of financing a long position is low compared with the potential capital appreciation.
  4. The price of any financial instrument (and in particular any one of my bombed-out favourites) can rise much farther than it falls; therefore the upside potential is far greater than the downside risk.
Taking item #4, what’s the point in betting £1-per-point that a 10p-per-share stock will halve in price? I know the answer to that one is to stake £100-per-point short instead, but then what if the price doubles overnight? Or worse? In contrast: a negligible-risk £1-per-point “starting bet” on 10p-per-share stock that used to be 1000p-per-share could be very lucrative eventually, especially if pyramided to higher stakes along the way.
Note that I am not predicting that the markets or my individual stock picks will rise rather than fall for here. I really have no idea what will happen, but I do know that I have more to gain (relative to my risk) by betting on a rise rather than a fall.