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Anyone can be permanently bearish (it works both ways - the permanent market cheerleaders are just as bad in reverse) and then go on CNBC and tell everyone they
by blitzar 3y ago
Anyone can be permanently bearish (it works both ways - the permanent market cheerleaders are just as bad in reverse) and then go on CNBC and tell everyone they correctly called every recession or bear market.
Typically these people have called 176 of the last 8 recessions.
There are plenty of fund managers out there that make some when its a bull market and make some in a bear market, they dont tend to go on tv and talk their book though.
- LatteLazy 3y agoYou're not wrong but... If you can get a 400:8 (50:1) returns, then betting on 176 recessions and winning 8 puts you well ahead of other traders.
- jmccaf 3y agoI'm less familiar with put and call options , compared to common shares and selling short; But one of the challenges to sell short, compared to buying long, is that your upside is limited and liability unlimited. Whereas the inverse for common stock, upside is unlimited and liability is limited. If you place 176 bets and win big 8, I think will be more successful buying long , like the venture capital model.
- LatteLazy 3y agoPeople say this, but of course if you invest via a hedge fund (or other similar corporate structure), your total downside is just whatever you invest. The fund maybe run up 1tn, or 1000tn in loses somehow, but that just means a lot of disappointed creditors meeting limited liability...
- oh_sigh 3y agoThere are options for limiting your losses, eg a bear put spread - buy put options at strike price X and sell put options at Y where Y < X.
- idoh 3y agoIf you buy an option (the right but not obligation to either buy or sell at a certain price), then your liability is limited to what you pay for it.
- takinola 3y agoInterestingly, it just occurred to me that VC is the exact opposite of this. Many VCs have called 176 of the last 8 unicorns. You can still make bank doing this though.
- blitzar 3y agoVC's put "early investor in Google and Uber" on their bio, not "passed on Series A Facebook because MySpace has already won the social media war, then begged to be in the last funding round before the float".
- collegeburner 3y agoyeah you don't actually have to get that many right when the winners return 750x
- blitzar 3y agoBut if you do get the 749th right - you can live off that reputation for a long time.