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My WFH-driven long bet against commercial real estate that I've held since pre-covid times continues to bear fruit

lumost 2y ago
Is there an effective means of shorting commercial real estate available to retail or "small" accredited investors? Seems like an easy bet to take.
- itsoktocry 2y ago
  >Seems like an easy bet to take. Well, yeah, you're two years too late.
  - lumost 2y ago
    Prices haven't really fallen yet to my knowledge. There is a lot of resistance to letting prices fall (marking to market), and many commercial real estate deals are multi-year. RTO mandates indicate that larger employers aren't yet willing to give up office work. IMO I expect to see something give over then next 3 years, with some markets taking longer to correct.
- freitzkriesler2 2y ago
  Yes, just short real estate investment trusts for commercial property, write puts (options) against these shares (warning make sure they're covered and not naked), or throw money at many of the ivnerse ETFs out there.
  - koolba 2y ago
    > warning make sure they're covered and not naked Covered puts wouldn’t be net short. They're net neutral or positive as the puts expire worthless if the price doesn’t drop. You can hedge your puts by buying some calls to limit the max exposure if the price rises. Buying puts would be a net short position.
- asdff 2y ago
  You are betting against the house though and the house always wins, logic be damned. commercial real estate is an over 22 trillion dollar market in the U.S., there is a lot of well lobbied vested interest in not letting that money poof into smoke.
fuzztester 2y ago
shorting or longing? pun intended sorry :) can anyone explain the difference between shorting a stock and the opposite of it, if any? and what both of them mean? ELI5, please. I've read about it from long back, but have been too lazy or never thought to check out what it meant, since I don't do much share trading. double sorry.
- boplicity 2y ago
  Shorting a stock is like taking out a loan, but when you pay it back, you don't pay it back at the value you started with, but at the new value. So, if you shorted starting at $100, and it's now worth $10, you could keep those $90, and pay back just the $10.
  - yetanother-1 2y ago
    But unlike stock buying, shorting can cause huge damage more the the starting value. If you short a stock at 100, and it reaches 10, you pay back at 10 and get to keep the remaining 90. If, however, that stock reaches 300, you have to pay the extra 200 from your pocket. So shorting is much bigger risk than investing directly in stocks.
    - Cupertino95014 2y ago
      That's if you actually borrow the stock & sell it, the old-fashioned way. There are less risky ways, like buying a put option.
- jjtheblunt 2y ago
  wikipedia can though investopedia might be a more fun rabbithole for you. https://www.investopedia.com/terms/s/shortsale.asp https://www.investopedia.com/terms/s/shortsale.asp
- attilakun 2y ago
  Long: you buy a stock, hold it, later on sell for profit or loss. Short: you borrow a stock, sell it, hold the money and later on buy the stock back at a lower or higher price you originally sold it for. Then return the stock to the person who lent it to you.
j7ake 2y ago
How did you profit from this bet?

Is there an effective means of shorting commercial real estate available to retail or "small" accredited investors? Seems like an easy bet to take.

itsoktocry 2y ago
>Seems like an easy bet to take. Well, yeah, you're two years too late.
- lumost 2y ago
  Prices haven't really fallen yet to my knowledge. There is a lot of resistance to letting prices fall (marking to market), and many commercial real estate deals are multi-year. RTO mandates indicate that larger employers aren't yet willing to give up office work. IMO I expect to see something give over then next 3 years, with some markets taking longer to correct.
freitzkriesler2 2y ago
Yes, just short real estate investment trusts for commercial property, write puts (options) against these shares (warning make sure they're covered and not naked), or throw money at many of the ivnerse ETFs out there.
- koolba 2y ago
  > warning make sure they're covered and not naked Covered puts wouldn’t be net short. They're net neutral or positive as the puts expire worthless if the price doesn’t drop. You can hedge your puts by buying some calls to limit the max exposure if the price rises. Buying puts would be a net short position.
asdff 2y ago
You are betting against the house though and the house always wins, logic be damned. commercial real estate is an over 22 trillion dollar market in the U.S., there is a lot of well lobbied vested interest in not letting that money poof into smoke.

fuzztester 2y ago

shorting or longing? pun intended sorry :) can anyone explain the difference between shorting a stock and the opposite of it, if any? and what both of them mean? ELI5, please. I've read about it from long back, but have been too lazy or never thought to check out what it meant, since I don't do much share trading. double sorry.

boplicity 2y ago
Shorting a stock is like taking out a loan, but when you pay it back, you don't pay it back at the value you started with, but at the new value. So, if you shorted starting at $100, and it's now worth $10, you could keep those $90, and pay back just the $10.
- yetanother-1 2y ago
  But unlike stock buying, shorting can cause huge damage more the the starting value. If you short a stock at 100, and it reaches 10, you pay back at 10 and get to keep the remaining 90. If, however, that stock reaches 300, you have to pay the extra 200 from your pocket. So shorting is much bigger risk than investing directly in stocks.
  - Cupertino95014 2y ago
    That's if you actually borrow the stock & sell it, the old-fashioned way. There are less risky ways, like buying a put option.
jjtheblunt 2y ago
wikipedia can though investopedia might be a more fun rabbithole for you. https://www.investopedia.com/terms/s/shortsale.asp https://www.investopedia.com/terms/s/shortsale.asp
attilakun 2y ago
Long: you buy a stock, hold it, later on sell for profit or loss. Short: you borrow a stock, sell it, hold the money and later on buy the stock back at a lower or higher price you originally sold it for. Then return the stock to the person who lent it to you.

j7ake 2y ago

How did you profit from this bet?