5 ms·

Suppose you've made such a prediction about a tech company. How do you act on it? You can buy stock, of course, but is there a more powerful action available?

tlholaday 16y ago
Sell the stock of its competitors short.
- mattmillr 16y ago
  Don't you have to borrow stock to sell it short? Can you do that for 6 years?
- aidenn0 16y ago
  Taking a short position in the competitors is troublesome because you need to time it right. If you think apple can win, you can go long any time the stock is low and end up a winner.
  - borism 16y ago
    who was apple competitors in 2000s anyway? I don't recall anyone noticeable
- gjm11 16y ago
  "The market can remain irrational longer than you can remain solvent." -- John Maynard Keynes.
- francoisdevlin 16y ago
  What happens when the entire market segment balloons? APPL might beat out MSFT, but if everyone is more profitable, your short failed.
  - zackattack 16y ago
    Are there publicly-available financial instruments that account for this?
    - francoisdevlin 16y ago
      A put order would work well for this, IIRC.
  - Timothee 16y ago
    Side-note: Apple's ticker symbol is AAPL, not APPL. It got me the first times too.
- rmc 16y ago
  You have to know what their compeditors are. Pre iPhone, Apple's compeditors were Microsoft. The iPhone makes it look like Apple's compeditors now are Nokia/RIM (the makers of Blackberry). However a case could be made that Apple's current iPhone compeditor is or will be Google. So if you wanna bet on the iPhone, it's not clear who you should short.
Tuna-Fish 16y ago
Leverage and buy stock. The only thing that stops you from increasing the size of your bet is the risk of the downside. To some point, this is manageable, but after that point, it becomes pure insanity. YMMV. Shorting the competitors because you think a company is going to do very well is actually a bad idea -- it's entirely possible that Microsoft would have been able to open another very profitable market.
- agbell 16y ago
  Buy Out of the money call options. lots of leverage for small premiums.
  - Tuna-Fish 16y ago
    They tend to not have that long times until maturity. Going long stock has an unique advantage for an investment strategy -- you do not need to know timing that well.
barrkel 16y ago
There's a bigger problem. There's always going to be a spot-on prediction ex post. But you need to know which prediction is spot-on ex ante.
vlad 16y ago
If you knew a technology was going to take off, learning their programming language/API and becoming a well-known expert on it could pay great dividends. Additionally, you could work there to make contacts and learn even more. Finally, you could try to join their developer programs while they are still in beta. Note that unlike suggestions to purchase stock in the company, this advice applies to technology at private companies, as well.
- zackattack 16y ago
  are humanized forms of indentured servitude legal anymore? for example, could you pay to send someone to the bignerdranch bootcamp to learn iphone dev, but then have some way of mitigating the risk that they don't then go ahead and auction their new skills, acquired at your expense, on the market?
  - jimbokun 16y ago
    Aren't these called non-competes?
    - zackattack 16y ago
      No, because I could train you to make iPhone apps for dentist appointments and then you could go sell your skills to make iPhone apps for farting. FartGenerator, Inc. is not in competition with iHaveAToothache LLC.
  - nostrademons 16y ago
    There are certain contracts you can make where you agree to work for X company for Y years if they pay for your education, or you have to pay them back for the cost. The U.S. Armed Forces does this with ROTC and the military academies. Several corporations will pay for an MBA if you come back to work for them afterwards, but you have to pony up the cash yourself if you choose not to work for them. In all these cases, the choice is always "Work for us or pay us back" - I don't think you can structure a contract so that they must work for you without running afoul of the 13th amendment.
gxti 16y ago
Prediction markets. They're like an elaborate, worldwide bet. Shame they're not government-sanctioned; a world with ubiquitous prediction markets would be interesting indeed. http://en.wikipedia.org/wiki/Prediction_market http://en.wikipedia.org/wiki/Prediction_market

tlholaday 16y ago

Sell the stock of its competitors short.

mattmillr 16y ago
Don't you have to borrow stock to sell it short? Can you do that for 6 years?
aidenn0 16y ago
Taking a short position in the competitors is troublesome because you need to time it right. If you think apple can win, you can go long any time the stock is low and end up a winner.
- borism 16y ago
  who was apple competitors in 2000s anyway? I don't recall anyone noticeable
gjm11 16y ago
"The market can remain irrational longer than you can remain solvent." -- John Maynard Keynes.
francoisdevlin 16y ago
What happens when the entire market segment balloons? APPL might beat out MSFT, but if everyone is more profitable, your short failed.
- zackattack 16y ago
  Are there publicly-available financial instruments that account for this?
  - francoisdevlin 16y ago
    A put order would work well for this, IIRC.
- Timothee 16y ago
  Side-note: Apple's ticker symbol is AAPL, not APPL. It got me the first times too.
rmc 16y ago
You have to know what their compeditors are. Pre iPhone, Apple's compeditors were Microsoft. The iPhone makes it look like Apple's compeditors now are Nokia/RIM (the makers of Blackberry). However a case could be made that Apple's current iPhone compeditor is or will be Google. So if you wanna bet on the iPhone, it's not clear who you should short.

Tuna-Fish 16y ago

Leverage and buy stock. The only thing that stops you from increasing the size of your bet is the risk of the downside. To some point, this is manageable, but after that point, it becomes pure insanity. YMMV. Shorting the competitors because you think a company is going to do very well is actually a bad idea -- it's entirely possible that Microsoft would have been able to open another very profitable market.

agbell 16y ago
Buy Out of the money call options. lots of leverage for small premiums.
- Tuna-Fish 16y ago
  They tend to not have that long times until maturity. Going long stock has an unique advantage for an investment strategy -- you do not need to know timing that well.

barrkel 16y ago

There's a bigger problem. There's always going to be a spot-on prediction ex post. But you need to know which prediction is spot-on ex ante.

vlad 16y ago

If you knew a technology was going to take off, learning their programming language/API and becoming a well-known expert on it could pay great dividends. Additionally, you could work there to make contacts and learn even more. Finally, you could try to join their developer programs while they are still in beta. Note that unlike suggestions to purchase stock in the company, this advice applies to technology at private companies, as well.

zackattack 16y ago
are humanized forms of indentured servitude legal anymore? for example, could you pay to send someone to the bignerdranch bootcamp to learn iphone dev, but then have some way of mitigating the risk that they don't then go ahead and auction their new skills, acquired at your expense, on the market?
- jimbokun 16y ago
  Aren't these called non-competes?
  - zackattack 16y ago
    No, because I could train you to make iPhone apps for dentist appointments and then you could go sell your skills to make iPhone apps for farting. FartGenerator, Inc. is not in competition with iHaveAToothache LLC.
- nostrademons 16y ago
  There are certain contracts you can make where you agree to work for X company for Y years if they pay for your education, or you have to pay them back for the cost. The U.S. Armed Forces does this with ROTC and the military academies. Several corporations will pay for an MBA if you come back to work for them afterwards, but you have to pony up the cash yourself if you choose not to work for them. In all these cases, the choice is always "Work for us or pay us back" - I don't think you can structure a contract so that they must work for you without running afoul of the 13th amendment.

gxti 16y ago

Prediction markets. They're like an elaborate, worldwide bet. Shame they're not government-sanctioned; a world with ubiquitous prediction markets would be interesting indeed. http://en.wikipedia.org/wiki/Prediction_market http://en.wikipedia.org/wiki/Prediction_market