Short it if you think it’s overvalued

ceejayoz 4 hours ago | parent | next [-]

Shorting requires both being right and good timing on when everyone else figures out you're right.

Famously: https://en.wikipedia.org/wiki/Michael_Burry

> During his payments toward the credit default swaps, Burry suffered an investor revolt, where some investors in his fund worried his predictions were inaccurate and demanded to withdraw their capital. Eventually, Burry's analysis proved correct: He made a personal profit of $100 million and a profit for his remaining investors of more than $700 million.

	▲	johnnyanmac 4 hours ago \| parent [-]
		Yeah, if Elon pulling off a Seig Heil and literally running away with a country's data wasn't good times to short, I don't know what will. You basically need to predict his death at this point. Which is unlikely due to being rich and not extremely old. But not off the table if you look behind the scenes at his habits.

▲

cramsession 4 hours ago | parent | prev | next [-]

I do hold TSLQ (and it's been doing great). That being said, Musk has engaged openly in fraud on a regular basis and the SEC has done nothing. At this point I have zero faith in the markets to adhere to the law.

▲

darth_avocado 4 hours ago | parent | next [-]

TSLQ has been doing barely okay. The problem with investment vehicles like TSLQ which are daily shorts, is that over a period of time, it will suffer the same drawbacks as holding a short position and therefore making the timing of the position very important.

	▲	cramsession 4 hours ago \| parent [-]
		Correct, but it's up 5% this month while most things are down. It's not a good idea to hold it long term for the reasons you say.

▲

parthdesai 4 hours ago | parent | prev [-]

Is it only Musk? Pretty sure the President himself is manipulating the market

▲

hypeatei 4 hours ago | parent | prev | next [-]

If you're going to gamble on $TSLA, shorting is probably the worst way to do so. It has unlimited downside (well, at least as much your broker allows before margin calling)

If you want to gamble, buy put options and size according to how much money you're okay with losing (the premium is all you pay)

	▲	rtkwe 4 hours ago \| parent [-]
		True short positions are out of reach for basically any normal investor except those with completely broken risk tolerances (selling unbacked call options), eg the degen gamblers of r/wallstreetbets.

▲

seydor 4 hours ago | parent | prev | next [-]

Shorting requires a timeframe. When?

▲

zhengyi13 4 hours ago | parent | prev | next [-]

... and the standard reply to this standard reply is "The market can remain irrational longer than you can remain solvent."

▲

bombcar 4 hours ago | parent [-]

The problem is it's very easy to make a long-term bet the stock will go up (buy the stock) but it is very hard to make a long-term bet the stock will go down (you have to pick a date by which it occurs).

▲

solatic 4 hours ago | parent | next [-]

You're correct, but your assertion needs a qualifier: it's hard for small investors to make a long-term bet that a stock will go down.

Large investors do not need to purchase index funds, instead they can direct index and purchase the underlying stocks directly. If you're a small investor, the index funds offer diversification but without the ability to divest from individual stocks covered by the index; large investors that are direct indexing can just decide to exclude meme stocks and not buy them, and in so doing make a long-term bet that those stocks will underperform the rest of the index (and without needing to pick a specific date by which that underperformance will happen, unlike a short).

There's an argument to be made that there should be a maximum share price (stocks that reach the maximum trigger an automatic stock split), and that stocks should be allowed to trade for fractions of a penny (after all, what really prevents this in a day and age where all trades are electronically settled? Nobody needs to cash out for literal copper pennies...). Much smaller individual share prices would make it more feasible for smaller investors to build direct indexing strategies.

	▲	bombcar 3 hours ago \| parent [-]
		True, though there are some ways of even relatively small investors doing direct indexing. But when you start modifying the index you're not really indexing anymore ... And this is not really a bet against the stock, just a value tilt away from it betting that there are better performance elsewhere. You don't make money because TSLA tanked, you make money (or don't lose money) because your money was elsewhere.

▲

zeroCalories 4 hours ago | parent | prev [-]

It's actually easy. Just sell and invest somewhere else.

	▲	IAmBroom 4 hours ago \| parent [-]
		Not the same thing at all.

▲

zeroCalories 4 hours ago | parent | prev [-]

Silly. You should be selling off th ese trash stocks. Don't know why people keep recommending market cap weighted funds when they're being manipulated by scam artists like Elon and Trump into making the world's retirement funds into bag holders.