Although short selling -- the practice of selling borrowed shares with the hope of repaying the loan by buying back the shares at a lower price -- goes against the American belief that stocks always go up, I have long been fascinated with it. My plan for my new blog series, Short Stories, is to discuss what works, what doesn't, and what some of the leading lights in shorting stocks think about its opportunities and threats. I will describe possible short trades and I'll seek your comments and questions for story ideas. I won't be offering any investment advice and I won't trade on any of the posts I write.

Bally Total Fitness Holding Corp. (Other OTC: BFTH) is in poor financial health. But there are some very smart investors who believe Bally will survive -- Stevie Cohen didn't build a 32,000 square foot Greenwich, CT mansion on money losing bets. On the other hand, 4.5 million Bally shares are sold short -- 11% of Bally's shares outstanding -- this makes me wonder what Cohen sees that I don't.

Bally generated $1 billion in sales and lost $19 million in the last twelve months during which time its stock tumbled 60% to $2.59 -- yielding a stock market capitalization -- shares times stock price -- of $107 million. A quick look at its balance sheet reveals a sobering reality -- Bally's liabilities are greater than its assets by $1.4 billion -- and Bally has had a negative net worth since 2003.

This raises a fundamental question -- how has Bally been able to stave off bankruptcy for so long? Thanks to an electric jolt to its economic heart from JPMorgan Chase & Co. (NYSE: JPM) in the form of a $284 million loan -- Bally came back to life after a sudden cardiac arrest with its announcement that it would not be able to make a payment due next April. Can Bally keep its heart beating long enough to make its stock a buy?