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"The market can remain irrational longer than you can remain solvent." The quote itself may be apocryphal, but the meaning is certainly true.
by in_cahoots 10y ago
"The market can remain irrational longer than you can remain solvent." The quote itself may be apocryphal, but the meaning is certainly true.
- danieltillett 10y agoNever short based on the rationality of the market. Plenty of investors have been right and ended up totally broke. On a personal note the worst investment I ever made was a short position where I was right, but six months too early.
- jimlawruk 10y agoReminds me of Michael Burry and others in The Big Short, who shorted the housing market, but had to wait a long time for the market adjust.
- adventured 10y agoNever short a stock, use puts. You define your maximum potential loss ahead of time. By doing so you can entirely remove the solvency factor in question. Then it becomes a matter of giving yourself enough time on the puts to be right (assuming your core premise is correct).
- sfifs 10y agoYou're assuming puts of sufficient duration would be available and liquid.