7 ms·

"Learn how to make money in a downward market." OK. As an individual who is not rich, where to start that learning?

fastchicken 15y ago
Look up Put options and shorting stock. Thats a good start. BTW, not exactly something you'd expect to do without some training. Like an average person setting up and running an EC2 cluster.
DanI-S 15y ago
Congratulations; you've just hit upon the problem.
philbarr 15y ago
I'm not rich either and had absolutely no idea about shares, so figured I should learn and am now reading "Investing In Shares For Dummies" - UK Edition. I know it's a For Dummies book but as I really knew nothing I had to start somewhere. It's been pretty good so far - particularly highlighting the difference between speculating (trying to get rich quick / gambling) and aggressive and cautious investing (where you expect returns in 2 - 5 years). In the chapter on bear markets (downward markets) the advice is: - Keep your money safe - use interest bearing vehicles such as bank and building society accounts (hmm, really, didn't people lose money in those?), National Savings certificates, or guaranteed income bonds. - Stick to necessities - get shares in stuff people always need, like food. - Use trailing stops. I guess once the market HAS crashed if you're sure which shares are way below value simply because of the crash you could buy those and wait until the market returns to normal?
- dotBen 15y ago
  "Investing In Shares For Dummies" Just make sure your reading material matches your expectations. They're going to ultimately teach you the "buy low, sell high" basics. And that's fine if you are just hobbying. What other folks in this sub-thread are talking about - shorting, puts, calls, futures, speculating against commodities and treasuries (not just buying them)... these are what the pros are doing and probably not going to be covered in 'for Dummies'. Whether or not you'll make/lose more money with one or the other is beyond scope here...
TDL 15y ago
I'm surprised that HN picked this up. Learning about the markets comes down to what you want to do (trade [stock, options, futures; pairs, scalping, etc.?] or invest [value, trend, momentum, etc.?]) I wish it was as easy as "buy low, sell high", but studies repeatedly show that most investors do the opposite. A good place to start is with Warren Buffets letters to shareholders & his letters to his hedge fund partners before the Berkshire days. All these letters are available online. For trading start with places like Stocktwits blogs, TheStreet.com, Marketwatch, Minyanville (they also have some good investing material.) For blogs, check out Barry Ritholtz (search his site for his "Apprenticed Investor" series" & David Merkel (he has done a lot of book reviews.) Also, there hundreds of trades on twitter now (twitter is rapidly becoming the new trading pit." Lastly, most U.S. based online brokerages have started to offer "paper money" accounts where you can use their platforms & "trade" real time prices. All The Best, TDL
- sixtofour 15y ago
  Thanks for the information. http://duckduckgo.com/?q=Warren+Buffet+letters http://duckduckgo.com/?q=Warren+Buffet+letters
TDL 15y ago
One other point (and I will stop posting to this thread.) Stay away from options, futures, & leverage (with real money) until you have a solid handle on how markets function. The same goes for ETFs & ETNs that make use of leverage (i.e. "2x's", "ultra", "3x's", etc.) All The Best, TDL
rmrm 15y ago
I decided I needed to hunt bubbles. I knew housing was in a bubble but I didn't make any money off of it. When I realized what I could have made, I realized I needed to keep my eyes open for the next one. There is a large bubble right now, in treasuries. The yields are low due to risk off, panic, deflation, and low because the Fed is unnaturally intervening. And low because they are at the tail end of a 30 year continuous bull market Shorting treasuries is not risk free, it may take some time for them to rise - but I believe with near certainty that they will, from here. Yields can double from here and still be at roughly 30 year lows. Short treasuries, with patience. It might take 3 or 4 years, but I believe nice gains are in store with very little risk. There are many options for doing this, all of them appear to be sub-optimal, but I found a few that should work with few negatives. The other upside is that shorting treasuries essentially and fundamentally hedges you against higher interest rates, which is a natural hedge, for anyone. With rates at historic lows, now seems a good time to lock it in.
- steve8918 15y ago
  Going against the Fed is probably the worst thing you can do. You never go counterparty to Big Money. I just shorted Treasuries via the TLT when it was 122 and just covered this morning at 116.75, when it hit the 10 day MA. I made a small profit, but there's no way I'm going to hold onto a position like that for 3-4 years. You have no clue where TLT will be trading at that point, and you could go broke shorting it. Trading is about getting the DIRECTION and the TIMING down right. There will be a time to short treasuries, but now is not the time, at least in my opinion.
  - rmrm 15y ago
    I bought an inverse, rather than shorting. I don't think it likely, or possible, for the 30 yr to go much lower. I can wait, my position doesn't have any time decay, and I'm in no hurry.
    - amalag 15y ago
      If you bought an inverse and you think you have no time decay, then please read the prospectus. Inverses are comprised of various instruments (including put options) and DO have time decay. If you read the prospectus you will see they are for replicating the movements on a DAILY basis. If you hold overnight for regular periods of time you are in for a shock.
base 15y ago
this is a great book: Crash Proof 2.0: How to Profit From the Economic Collapse http://www.amazon.com/Crash-Proof-2-0-Economic-Collapse/dp/047047453X/ http://www.amazon.com/Crash-Proof-2-0-Economic-Collapse/dp/0... Is from a guy that have been predicting this collapse since 2006.
- kokey 15y ago
  After I saw the Rastani clip Yesterday, I thought that he made me think of Peter Schiff, but one that says things the more left leaning media would like to hear.
  - cturner 15y ago
    > I thought that he made me think of Peter Schiff This guy is less doomsday than Schiff - Schiff wouldn't talk of a move to treasuries. He'd say that America faces the same problem as Europe, but claim that they've got structures that have allowed them to kick the can further down the road. He'd push metals as a safehaven.
retube 15y ago
There's basically two ways: 1) You go short the underlying market(s), that is you sell them. Individuals don't (as far as I know) have access to the repo (repurchase) markets. What you do here is borrow a stock, sell it, then buy it back later to return to the guy you borrowed from. If the market has gone down you can buy it back for less than you sold it, hence making a profit. The other way to short a market is a) sell calls or b) buy puts. These _are_ available to the individual. A put gives you the option to sell a stock at some predetermined price. If the stock falls below that price (the strike) then you can sell it at a price above the market. You prob don't want to sell a call as this gives you unlimited downside if teh market rallies :). There are also more complex strategies such as call spreads, risk reversals etc which give you varying pay-off profiles. 2) You go long (buy) assets which are negatively correlated with the market you want to short. E.g if the eurozone implodes will see the following: dollar and yen will appreciate against the euro, treasuries will appreciate. Gold would normally appreciate as traditional safe haven but the outlook for this is way less certain: it's getting hammered at the moment, partly due to underlying global economic concerns (ie industrial demand for gold will drop) plus people are having to sell gold to meet margin calls on losses in equities. this has triggered further selling by the chinese who are long gold and getting squeezed. Also the swiss franc would normally be a safe haven, but the SNB is defending the level of the ccy at 1.2 vs the euro to protect swiss exports and tourism. The problem is that the yen, dollar and treasuries aren't great places to park cash: safe yes, you won't lose anything but rates are so low you won't really earn anything either.
- samuelprn 15y ago
  Hi.. how do u sell a stock that you dont hold ? in futures i understand that we can sell even if we dont hold and buy back later to make the difference.. in this can can you elaborate how do u actually borrow a stock and sell it ? does it mean that i have to know the person who holds the stock so he can let u the stock at the market price ?
- mdda 15y ago
  Also, have a look at ETF (exchange traded funds) that are 'short'. These give you a short exposure to the underlying, while having similar trading costs to regular equities.
patrickgzill 15y ago
Read up on the Kondratieff Cycle, should guide you in what asset classes to have a look at.
- sixtofour 15y ago
  http://duckduckgo.com/?q=Kondratieff+Cycle http://duckduckgo.com/?q=Kondratieff+Cycle Wikipedia: "Kondratiev waves (also called supercycles, great surges, long waves, K-waves or the long economic cycle) are described as sinusoidal-like cycles in the modern capitalist world economy.[1] Averaging fifty and ranging from approximately forty to sixty years in length, the cycles consist of alternating periods between high sectoral growth and periods of relatively slow growth. Unlike the short-term business cycle, the long wave of this theory is not accepted by current mainstream economics. ... "Long wave theory is not accepted by most academic economists, but it is one of the bases of innovation-based, development, and evolutionary economics, i.e. the main[citation needed] heterodox stream in economics. Among economists who accept it, there has been no universal agreement about the start and the end years of particular waves. This points to another criticism of the theory: that it amounts to seeing patterns in a mass of statistics that aren't really there."
  - patrickgzill 15y ago
    This is the chart (I may not agree on the dates) that I had in mind... the issue for me is that the best asset class to invest in, will change over time. http://northcoastinvestmentresearch.files.wordpress.com/2009/01/kondratieff-cycle.jpg http://northcoastinvestmentresearch.files.wordpress.com/2009...
  - SkyMarshal 15y ago
    Good lookup. There's simply not enough data for something like K-waves. If the average cycle is 50 years, then only 6 or so could have occured since the Industrial Revolution. Way too small sample size to draw any conclusions, especially since it's likely the economy behaves more according to 'rough' fractal and power laws than clean, repeating sin wave cycles.
  - roblev 15y ago

Look up Put options and shorting stock. Thats a good start. BTW, not exactly something you'd expect to do without some training. Like an average person setting up and running an EC2 cluster.

DanI-S 15y ago

Congratulations; you've just hit upon the problem.

philbarr 15y ago

I'm not rich either and had absolutely no idea about shares, so figured I should learn and am now reading "Investing In Shares For Dummies" - UK Edition. I know it's a For Dummies book but as I really knew nothing I had to start somewhere. It's been pretty good so far - particularly highlighting the difference between speculating (trying to get rich quick / gambling) and aggressive and cautious investing (where you expect returns in 2 - 5 years). In the chapter on bear markets (downward markets) the advice is: - Keep your money safe - use interest bearing vehicles such as bank and building society accounts (hmm, really, didn't people lose money in those?), National Savings certificates, or guaranteed income bonds. - Stick to necessities - get shares in stuff people always need, like food. - Use trailing stops. I guess once the market HAS crashed if you're sure which shares are way below value simply because of the crash you could buy those and wait until the market returns to normal?

dotBen 15y ago
"Investing In Shares For Dummies" Just make sure your reading material matches your expectations. They're going to ultimately teach you the "buy low, sell high" basics. And that's fine if you are just hobbying. What other folks in this sub-thread are talking about - shorting, puts, calls, futures, speculating against commodities and treasuries (not just buying them)... these are what the pros are doing and probably not going to be covered in 'for Dummies'. Whether or not you'll make/lose more money with one or the other is beyond scope here...

TDL 15y ago

I'm surprised that HN picked this up. Learning about the markets comes down to what you want to do (trade [stock, options, futures; pairs, scalping, etc.?] or invest [value, trend, momentum, etc.?]) I wish it was as easy as "buy low, sell high", but studies repeatedly show that most investors do the opposite. A good place to start is with Warren Buffets letters to shareholders & his letters to his hedge fund partners before the Berkshire days. All these letters are available online. For trading start with places like Stocktwits blogs, TheStreet.com, Marketwatch, Minyanville (they also have some good investing material.) For blogs, check out Barry Ritholtz (search his site for his "Apprenticed Investor" series" & David Merkel (he has done a lot of book reviews.) Also, there hundreds of trades on twitter now (twitter is rapidly becoming the new trading pit." Lastly, most U.S. based online brokerages have started to offer "paper money" accounts where you can use their platforms & "trade" real time prices. All The Best, TDL

sixtofour 15y ago
Thanks for the information. http://duckduckgo.com/?q=Warren+Buffet+letters http://duckduckgo.com/?q=Warren+Buffet+letters

TDL 15y ago

One other point (and I will stop posting to this thread.) Stay away from options, futures, & leverage (with real money) until you have a solid handle on how markets function. The same goes for ETFs & ETNs that make use of leverage (i.e. "2x's", "ultra", "3x's", etc.) All The Best, TDL

rmrm 15y ago

I decided I needed to hunt bubbles. I knew housing was in a bubble but I didn't make any money off of it. When I realized what I could have made, I realized I needed to keep my eyes open for the next one. There is a large bubble right now, in treasuries. The yields are low due to risk off, panic, deflation, and low because the Fed is unnaturally intervening. And low because they are at the tail end of a 30 year continuous bull market Shorting treasuries is not risk free, it may take some time for them to rise - but I believe with near certainty that they will, from here. Yields can double from here and still be at roughly 30 year lows. Short treasuries, with patience. It might take 3 or 4 years, but I believe nice gains are in store with very little risk. There are many options for doing this, all of them appear to be sub-optimal, but I found a few that should work with few negatives. The other upside is that shorting treasuries essentially and fundamentally hedges you against higher interest rates, which is a natural hedge, for anyone. With rates at historic lows, now seems a good time to lock it in.

steve8918 15y ago
Going against the Fed is probably the worst thing you can do. You never go counterparty to Big Money. I just shorted Treasuries via the TLT when it was 122 and just covered this morning at 116.75, when it hit the 10 day MA. I made a small profit, but there's no way I'm going to hold onto a position like that for 3-4 years. You have no clue where TLT will be trading at that point, and you could go broke shorting it. Trading is about getting the DIRECTION and the TIMING down right. There will be a time to short treasuries, but now is not the time, at least in my opinion.
- rmrm 15y ago
  I bought an inverse, rather than shorting. I don't think it likely, or possible, for the 30 yr to go much lower. I can wait, my position doesn't have any time decay, and I'm in no hurry.
  - amalag 15y ago
    If you bought an inverse and you think you have no time decay, then please read the prospectus. Inverses are comprised of various instruments (including put options) and DO have time decay. If you read the prospectus you will see they are for replicating the movements on a DAILY basis. If you hold overnight for regular periods of time you are in for a shock.

base 15y ago

this is a great book: Crash Proof 2.0: How to Profit From the Economic Collapse http://www.amazon.com/Crash-Proof-2-0-Economic-Collapse/dp/047047453X/ http://www.amazon.com/Crash-Proof-2-0-Economic-Collapse/dp/0... Is from a guy that have been predicting this collapse since 2006.

kokey 15y ago
After I saw the Rastani clip Yesterday, I thought that he made me think of Peter Schiff, but one that says things the more left leaning media would like to hear.
- cturner 15y ago
  > I thought that he made me think of Peter Schiff This guy is less doomsday than Schiff - Schiff wouldn't talk of a move to treasuries. He'd say that America faces the same problem as Europe, but claim that they've got structures that have allowed them to kick the can further down the road. He'd push metals as a safehaven.

retube 15y ago

There's basically two ways: 1) You go short the underlying market(s), that is you sell them. Individuals don't (as far as I know) have access to the repo (repurchase) markets. What you do here is borrow a stock, sell it, then buy it back later to return to the guy you borrowed from. If the market has gone down you can buy it back for less than you sold it, hence making a profit. The other way to short a market is a) sell calls or b) buy puts. These _are_ available to the individual. A put gives you the option to sell a stock at some predetermined price. If the stock falls below that price (the strike) then you can sell it at a price above the market. You prob don't want to sell a call as this gives you unlimited downside if teh market rallies :). There are also more complex strategies such as call spreads, risk reversals etc which give you varying pay-off profiles. 2) You go long (buy) assets which are negatively correlated with the market you want to short. E.g if the eurozone implodes will see the following: dollar and yen will appreciate against the euro, treasuries will appreciate. Gold would normally appreciate as traditional safe haven but the outlook for this is way less certain: it's getting hammered at the moment, partly due to underlying global economic concerns (ie industrial demand for gold will drop) plus people are having to sell gold to meet margin calls on losses in equities. this has triggered further selling by the chinese who are long gold and getting squeezed. Also the swiss franc would normally be a safe haven, but the SNB is defending the level of the ccy at 1.2 vs the euro to protect swiss exports and tourism. The problem is that the yen, dollar and treasuries aren't great places to park cash: safe yes, you won't lose anything but rates are so low you won't really earn anything either.

samuelprn 15y ago
Hi.. how do u sell a stock that you dont hold ? in futures i understand that we can sell even if we dont hold and buy back later to make the difference.. in this can can you elaborate how do u actually borrow a stock and sell it ? does it mean that i have to know the person who holds the stock so he can let u the stock at the market price ?
mdda 15y ago
Also, have a look at ETF (exchange traded funds) that are 'short'. These give you a short exposure to the underlying, while having similar trading costs to regular equities.

patrickgzill 15y ago

Read up on the Kondratieff Cycle, should guide you in what asset classes to have a look at.

sixtofour 15y ago
http://duckduckgo.com/?q=Kondratieff+Cycle http://duckduckgo.com/?q=Kondratieff+Cycle Wikipedia: "Kondratiev waves (also called supercycles, great surges, long waves, K-waves or the long economic cycle) are described as sinusoidal-like cycles in the modern capitalist world economy.[1] Averaging fifty and ranging from approximately forty to sixty years in length, the cycles consist of alternating periods between high sectoral growth and periods of relatively slow growth. Unlike the short-term business cycle, the long wave of this theory is not accepted by current mainstream economics. ... "Long wave theory is not accepted by most academic economists, but it is one of the bases of innovation-based, development, and evolutionary economics, i.e. the main[citation needed] heterodox stream in economics. Among economists who accept it, there has been no universal agreement about the start and the end years of particular waves. This points to another criticism of the theory: that it amounts to seeing patterns in a mass of statistics that aren't really there."
- patrickgzill 15y ago
  This is the chart (I may not agree on the dates) that I had in mind... the issue for me is that the best asset class to invest in, will change over time. http://northcoastinvestmentresearch.files.wordpress.com/2009/01/kondratieff-cycle.jpg http://northcoastinvestmentresearch.files.wordpress.com/2009...
- SkyMarshal 15y ago
  Good lookup. There's simply not enough data for something like K-waves. If the average cycle is 50 years, then only 6 or so could have occured since the Industrial Revolution. Way too small sample size to draw any conclusions, especially since it's likely the economy behaves more according to 'rough' fractal and power laws than clean, repeating sin wave cycles.
- roblev 15y ago