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> The stock market hasn't quite priced in damage yet. Quite the claim. Anyone with confidence in this theory should take a short position now and pick up their

> The stock market hasn't quite priced in damage yet. Quite the claim. Anyone with confidence in this theory should take a short position now and pick up their million bucks after the market “prices in the damage.”

nscalf 7y ago
That's assuming you can time it right. I've been holding puts for ~2 months, and I went from very right to very wrong very quickly. I also fully anticipate to be very right again as soon as the fed stops pumping trillions of dollars into companies that were ill prepared for risk.
- epistasis 7y ago
  This is totally the hard part to know: how much will Trump prop up the stock market? I recently heard the expression "the stock market is just a graph of rich people's emotions" and find it to be the most pithy truth of economics that I've encountered. A lot goes go into those emotions that we can not anticipate.
- cheez 7y ago
  > I also fully anticipate to be very right again as soon as the fed stops pumping trillions of dollars into companies that were ill prepared for risk. Be careful...
  - nscalf 6y ago
    I was mostly being sarcastic, but I think it's relevant to direct you to this article (found in top 50 on HN). https://thesoundingline.com/fed-slows-qe-unlimited-to-just-83-billion-a-week/ https://thesoundingline.com/fed-slows-qe-unlimited-to-just-8.... I'm hesitant to say that they're going to stop buying, but there is at least evidence of slowing.
    - cheez 6y ago
      I just said be careful, they can pump and release at will. You can't predict when they will do it, it's better to wait for them to announce it and THEN take action.
- freepor 7y ago
  And why will the Fed stop spending my great-grandchildren’s money to prop up the stock market? I don’t see a reason.
- jaredklewis 6y ago
  But timing is the whole thing. There is nothing else to be right or wrong about. I mean, sure I can predict that the market go down and sure, sometime between now and the heat death of the universe the market will go down. Same about the market going up. But these kind of predictions are meaningless.
gamblor956 7y ago
Unfortunately, unlike simply buying stock a short position exposes the trader to unlimited downside. You can be completely right about what's going to happen but a miss in timing could ruin you.
ogre_codes 6y ago
Making a killing on a market downturn is hard. Particularly when the majority of your investments are in an IRA which has pretty strict limits on shorting and trading options. Trust me, I tried in early March. The big problem is unless your timing is perfect, you have to be able to suck up huge losses until things fall apart. To make your million bucks, you might have $100,000 in puts which you watch turn into $10,000 over 6 months only to have the market correct after you cover your position. Bill Ackman did set up a hedge and pocketed a couple billion betting the market was wrong about the risk the virus presented. https://www.forbes.com/sites/antoinegara/2020/03/25/billionaire-bill-ackman-100-fold-return-on-coronavirus-hedge-2-billion/#762efb196fcc https://www.forbes.com/sites/antoinegara/2020/03/25/billiona... I’m not Bill Ackman. I doubt you are either. If you’re lucky, you spot these trends enough where you avoid getting soaked on downturns. I’ve been pretty good at that last bit.

nscalf 7y ago

That's assuming you can time it right. I've been holding puts for ~2 months, and I went from very right to very wrong very quickly. I also fully anticipate to be very right again as soon as the fed stops pumping trillions of dollars into companies that were ill prepared for risk.

epistasis 7y ago
This is totally the hard part to know: how much will Trump prop up the stock market? I recently heard the expression "the stock market is just a graph of rich people's emotions" and find it to be the most pithy truth of economics that I've encountered. A lot goes go into those emotions that we can not anticipate.
cheez 7y ago
> I also fully anticipate to be very right again as soon as the fed stops pumping trillions of dollars into companies that were ill prepared for risk. Be careful...
- nscalf 6y ago
  I was mostly being sarcastic, but I think it's relevant to direct you to this article (found in top 50 on HN). https://thesoundingline.com/fed-slows-qe-unlimited-to-just-83-billion-a-week/ https://thesoundingline.com/fed-slows-qe-unlimited-to-just-8.... I'm hesitant to say that they're going to stop buying, but there is at least evidence of slowing.
  - cheez 6y ago
    I just said be careful, they can pump and release at will. You can't predict when they will do it, it's better to wait for them to announce it and THEN take action.
freepor 7y ago
And why will the Fed stop spending my great-grandchildren’s money to prop up the stock market? I don’t see a reason.
jaredklewis 6y ago
But timing is the whole thing. There is nothing else to be right or wrong about. I mean, sure I can predict that the market go down and sure, sometime between now and the heat death of the universe the market will go down. Same about the market going up. But these kind of predictions are meaningless.

gamblor956 7y ago

Unfortunately, unlike simply buying stock a short position exposes the trader to unlimited downside. You can be completely right about what's going to happen but a miss in timing could ruin you.

ogre_codes 6y ago

Making a killing on a market downturn is hard. Particularly when the majority of your investments are in an IRA which has pretty strict limits on shorting and trading options. Trust me, I tried in early March. The big problem is unless your timing is perfect, you have to be able to suck up huge losses until things fall apart. To make your million bucks, you might have $100,000 in puts which you watch turn into $10,000 over 6 months only to have the market correct after you cover your position. Bill Ackman did set up a hedge and pocketed a couple billion betting the market was wrong about the risk the virus presented. https://www.forbes.com/sites/antoinegara/2020/03/25/billionaire-bill-ackman-100-fold-return-on-coronavirus-hedge-2-billion/#762efb196fcc https://www.forbes.com/sites/antoinegara/2020/03/25/billiona... I’m not Bill Ackman. I doubt you are either. If you’re lucky, you spot these trends enough where you avoid getting soaked on downturns. I’ve been pretty good at that last bit.