The bears were wrong

that 's right

One previous poster mentioned Victor Niederhoffer (thanks for the link)well think what you want of his record, personally I think he deserves respect and has interesting things to say , one of them (listen) being that shorting stocks is a ticket to the poorhouse. I also read that Soros admitted to Victor having lost more on shorting stocks than on any other type of trade. I am not going to argue with these guys, it's OK because I happen to think the same
 
Quote from Kicking:

that 's right

One previous poster mentioned Victor Niederhoffer (thanks for the link)well think what you want of his record, personally I think he deserves respect and has interesting things to say , one of them (listen) being that shorting stocks is a ticket to the poorhouse. I also read that Soros admitted to Victor having lost more on shorting stocks than on any other type of trade. I am not going to argue with these guys, it's OK because I happen to think the same
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Why should shorting stocks be a ticket to the poorhouse? In a bear market shorting is as profitable as going long in a bull market. The risk is the same; if you use a disciplined money management strategy of course.
 
Quote from Kicking:

Shorts as usual got taken for a ride yesterday before the plunge. Many were shaken out and that is why the market plunged today with no pullback whatsoever (something that has not happened in months or years actually). This is my whole point, it is IMPOSSIBLE to consistently have perfect timing on the short side in the stockmarket . There is a time to lean on the short side and another to favor the long side. Of course, the window of opportunity on the short side is always ... very short.


So would a 16 year bear market from 1966 to 1982 represent a short period of time? And Kicking also says:

"This is not a so much a thread about the future direction of the market as it is a thread about the psychology of the bears- not just the perennial bears- but all who short stocks for other reason than pure hedging purpose more often than they should. The traits that spell failure for long term bears are the same that often cause debilitating losses to traders. The danger of not recognizing the urge of trading against the natural upward bias of stocks- often because one missed the move- is a problem traders rarely discuss , the preposterous argument that one has to play both sides of the stockmarket to be successful takes over."

Very consistent logic. He says there is a time for shorting. Then he says shorting is preposterous. He says timing shorts is impossible. Yet timing long positions is easy.

No point even in trying to argue with you. You make reference to stock market indexes. Again, do you know what survivor bias is? Do you know how inflation works? Do you know how much of index returns are dependent on dividends?

Discussion over. Next time you're talking to your good buddy Warren Buffet, send him my regards.
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plugger I think I will use the ignore function for the first time ever with you



Quote from studyandtrade:

In a bear market shorting is as profitable as going long in a bull market. The risk is the same
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studyandtrade

sorry I really didn't want to make fun of you anymore after your gold thread, but seems like you are still mostly at the "study" stage, well I do hope you paper trade if you already trade.

No the risk is NOT the same. For starters, unlike what is commonly thought stocks go up faster than they go down. They only go down faster during a crash-like event (crash, mini crash, big correction whatever you call it) . A crash lasts just a couple of days, crashes don't happen very often, actually they are RARE events. So once every decade perhaps you have just a couple of days to profit from stocks going down faster than they went up. Otherwise when they go down with the market (not for specific reason) , most stocks that have big enough a float to be safely shorted, do so in a slow grind, with furious bear rallies in between.

Whenever you short individual stocks you expose yourself to losing more than 100% and you will never make more than 100%, actually 50% is considered a killing when shorting. I am not interested in risking 50-100% in case of a buyout overnight just to hope making 50-70% at best.

Many hedge funds short selling individual stocks are privy to information you will never have access to. They don't just short because they see a head and shoulders they know that would be stupid .
 
Please do Kicking. Wouldn't want you to see how you contradict yourself.

Glad to see you were bearish since Wednesday. Guess that makes you a pessimist. Oh wait a minute, yet another contradiction.

Maybe when you have more experience you'll learn too.

Good luck.
 
studyandtrade

sorry I really didn't want to make fun of you anymore after your gold thread, but seems like you are still mostly at the "study" stage, well I do hope you paper trade if you already trade.

No the risk is NOT the same. For starters, unlike what is commonly thought stocks go up faster than they go down. They only go down faster during a crash-like event (crash, mini crash, big correction whatever you call it) . A crash lasts just a couple of days, crashes don't happen very often, actually they are RARE events. So once every decade perhaps you have just a couple of days to profit from stocks going down faster than they went up. Otherwise when they go down with the market (not for specific reason) , most stocks that have big enough a float to be safely shorted, do so in a slow grind, with furious bear rallies in between.

Whenever you short individual stocks you expose yourself to losing more than 100% and you will never make more than 100%, actually 50% is considered a killing when shorting. I am not interested in risking 50-100% in case of a buyout overnight just to hope making 50-70% at best.

Many hedge funds short selling individual stocks are privy to information you will never have access to. They don't just short because they see a head and shoulders they know that would be stupid .

-Kicking

StudyandTrade, take everything you read here with a grain of salt (including my posts). As for his advice, I don't think he has any grasp or understanding of market history. Who the hell cares how fast a stock goes down if you're short, as long as it goes down. The U.S. market has experienced long and painful secular bear markets lasting years and in some cases over a decade (case in point is the Nasdaq from 2000 to present, or Dow 1966 to 1982). Doing some research on your own will give you more than enough information to short a stock. You dont' need inside information to make money shorting. As for returns on shorting, I consider a 50 to 70% gain to be very good. Obviously my good friend Kicking is doing much better than that.

Anyways, this will be my last post on this topic. Don't let anyone else tell you how to think and good luck to you.
 
Quote from Kicking:
[studyandtrade

sorry I really didn't want to make fun of you anymore after your gold thread, but seems like you are still mostly at the "study" stage, well I do hope you paper trade if you already trade.

No the risk is NOT the same. For starters, unlike what is commonly thought stocks go up faster than they go down. They only go down faster during a crash-like event (crash, mini crash, big correction whatever you call it) . A crash lasts just a couple of days, crashes don't happen very often, actually they are RARE events. So once every decade perhaps you have just a couple of days to profit from stocks going down faster than they went up. Otherwise when they go down with the market (not for specific reason) , most stocks that have big enough a float to be safely shorted, do so in a slow grind, with furious bear rallies in between.

Whenever you short individual stocks you expose yourself to losing more than 100% and you will never make more than 100%, actually 50% is considered a killing when shorting. I am not interested in risking 50-100% in case of a buyout overnight just to hope making 50-70% at best.

Many hedge funds short selling individual stocks are privy to information you will never have access to. They don't just short because they see a head and shoulders they know that would be stupid . [/B]
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Hi Kicking,
Please make as much fun as you want; no problem to me!
As to shorting stocks: have you ever shorted any stock? I don't think you have. I can tell you that I succesfuly shorted Enron, Dynegy, Citygroup and Boeing in the summer of 2001 so I know what I am talking about. Of course other shorts didn't work out as expected BUT I never lost more than 8-10% on any of my short positions! As with my long positions I use rigid GTC stop loss orders to limit my losses. You shouldn't have omitted the last sentence of my post: --> "if you use a disciplined money management strategy of course." And last but not least I wrote that you should only short stocks if the environment is definitely bearish. If you follow these simple rules shorting stocks isn't riskier than buying long. But of course, as with everything else in live you need to have courage, discipline and some luck to succeed. In this respect I don't think you can learn me anything new!
 
studyand trade,

Yes of course I have shorted stocks but mostly intraday. These days I no longer daytrade in the stockmarket so maybe I shorted a dozen times since 2003 and it was a waste of my time. One the first times I shorted was that day in April 2000 when everything collapsed, shorting was the easiest thing to do. I also remember that in the last hour I shorted a stock around 91 ( think it was VRSN) to hold it overnight when it went over 93 I decided to cover but I was trading in the university computer room with an online broker. By the time my order was executed 5 minutes or so later the stock had moved several points against me. That was an odd lot because I was cautious for an overnight , had it been bigger it would have wiped out most of my profits for that day. This kind of move rarely happens on the long side .


Again the risk reward is usually poor. You are absolutely right to say you have to wait for bearish conditions ( then a rally I would add). But if I am not absolutely sure the market is about to drop big time tomorrow or the next day, I 'd much rather use options or go in cash and move to another market than try to be a hero.

Shorting draws people who want to be a hero. They want to be the smart guy who caught the top or rode an overpriced stock back to 0. But really for every big winner (and what is big, as I said 70% at best) you gonna have you will have a dozen losers or scratched trades. Personally I don't think this is worth the aggravation, the research time and the potential debilitating losses. Plus there are too many people shorting these days, hedge funds, online traders, day traders etc. I would think differently if there were less players on the short side.
 
Quote from Kicking:

Shorts as usual got taken for a ride yesterday before the plunge. Many were shaken out and that is why the market plunged today with no pullback whatsoever (something that has not happened in months or years actually). This is my whole point, it is IMPOSSIBLE to consistently have perfect timing on the short side in the stockmarket . There is a time to lean on the short side and another to favor the long side. Of course, the window of opportunity on the short side is always ... very short.
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I guess you've not been around all that long. I shorted VTSS at $97 back in February 2000. It's now $2.20. INTC was $75 back in 2000, now $21. CSCO was $75, now $18. SUNW was $60, now $4+. And let's not forget about all the dot-com busts. ARBA was $1000, now $8. MSTR was $3000, now $90+. ITWO was $4000, now $15. Some are obviously adjusted for the reverse splits.

And last, the NAZ was at 5000+ in 2000. Now at 2250. Needs more than 100% move up from here to reach those levels again. So money can be made consistently on the short side, both short term and longer term.

So the "window of opportunity" on the short side is NOT short, as you stated.

Do you also subscribe to the theory that a football team is better off just running the ball and not passing (or vice versa)? To NOT utilize all your options is foolish, whether in football or trading.
 
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