I was gonna short some Herbalife in my IRA last night. Looks like it’s tanked 50% since January and I’m not going to try to catch that knife, but I probably should. I’d like a list of multilevel marketing companies so I could short a bunch of them. I think there is way too much consumer debt out there, and they’ve preyed on too many victims.
Anyone got any great short ideas? I also want to short the Nasdaq 100, but I’m not sure how. Oh, and I looked into buying a gold EFT, and it’s already up like 30% over the last year.
Eh I don’t think it’s generally a good idea to short buckets of companies. Individual stocks make much better short targets, but still require more than just a hunch. I wouldn’t recommend shorting anything–if you’re that pessimistic, move money from stocks into a high yield savings account or just leave it as cash in your IRA.
People short Tesla a lot, but I would not mess with that. Elon isn’t dumb and it has some great products. There are many wounded animals out there and it’s easier to bum hunt than to try to take down Johnny Chan.
Elon Musk is a compulsive liar who should be in jail for securities fraud. The company is burning billions with absolutely no prospect for profitable operations.
I’m pretty sure you can’t short stocks in an IRA account, and if you can figure out how to do so, I’d still think it’s a bad idea. More generally, I would strongly encourage you not to short stocks at all. You almost certainly don’t have superior knowledge about the right valuation level for the Nasdaq index, and it’s unlikely that you can identify firms that are:
obviously terrible businesses
trading at a high valuation that doesn’t reflect how terrible they are
easily shortable
If you think that valuations are too high, just keep your asset allocation more tilted toward cash than you otherwise would. Shorting is a hard game (e.g., I’ve lost money shorting two different companies that ultimately went bankrupt), and the really terrible thing is that when things go wrong, you end up with a larger bet than you started with, which sucks. To illustrate:
You buy company ABC because you feel good about it, and you make it 5% of your portfolio. It goes down by 50%, and now it’s 2.5% of your portfolio, and your bad investment is a smaller percentage of your portfolio.
You short company ABC because you think it’s crap, and the short represents 5% of your portfolio. It goes up by 50% and now it’s 7.5% of your portfolio AND you’ve got to come up with extra equity to maintain margin requirements. It’s super mentally taxing when short positions go badly against you.
I’m happy to talk about shorting and options and investing all day - I love this stuff and it’s what I study for a living. But the tldr is:
don’t short
don’t dabble in options
maintain a sensible asset allocation with passive, low-fee index funds (I think target date retirement funds are excellent), check the balances once a quarter, and devote your time and energy to chess or video games or woodworking
Also, this type of thing is what my Personal Finance thread was supposed to be about!
spidercrab what are your thoughts on Mike Burry calling indexed stocks a huge bubble? That read of the situation read pretty true to me. I also can’t help but notice Buffett has stacked up 120B in cash that he can’t seem to allocate.
Help me understand how this isn’t a super obvious moment to go to cash.
EDIT: To be clear I’ve been in cash for quite some time because I own a business and buying financial products with a 5% yield and real risk is kind of the opposite of smart for me.
Well maybe for whatever your specific situation is, it makes sense to go to cash. But again, a lot of people have been expecting a crash for a long time, and some of them have lost a lot of money thinking it was obvious.
I mean some day a crash will happen but it’s almost never obvious. I just plan to ride it out.
