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Being a big shorter isn't for the weary.... Most will accumulate large losses until they go bankrupt or the freak black swan happens and they make 1000x% for th
by alphacatcher 8y ago
Being a big shorter isn't for the weary.... Most will accumulate large losses until they go bankrupt or the freak black swan happens and they make 1000x% for the trouble (erasing the accumulated losses very quickly, if smartly positioned).
On the otherside, Bullish banks/etc will make small profits consistently for long periods of time on bullish bets but when the black swan happens, will lose everything they made over the years and more, to the shorters (in 2008 banks had record profits until they lost more money than banks ever made in the history of modern banking).
Gabish?
- a008t 8y agoOn the other hand: 1. Determining skill from luck is difficult if we have a very small sample of successful trades (e.g. shorting banks correctly in 2008, but getting everything else wrong) 2. In order for a diversified investor (e.g. into FTSE World, some bonds and precious metals) to lose everything would require one hell of a black swan. Some kind of forceful expropriation of their assets is much more likely. The problem for the shorters now is that the exact same arguments they are making now could have been made 5 years ago.