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What are you shorting today?


jeffsreng
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I have to disagree.  Shorting takes a different kind of skill sets, experiences and time.

 

Usually, one would do these 3 things:

 

1) Buy ==== which is the most easy to do

2) Sell ==== which is the most difficult to do

3) Pass === which is the most hardest to do.  Just try to sit on your butt for 12 years like Munger

 

Shorting is a different ball game.  It stretch your minds to think differently about a business.  It's a way to invert your bull cases.

Also, your time frame is against you and your loss is infinite.  It is a harder game to play but a great tool to improve you as an investor.

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I'm not saying it's the SAME thing. I just don't understand why it needs a separate thread. Is it not a form of selling/buying(covering) that could be discussed in the buy/sell threads?

 

Like I said, I'm sure I'm overreacting. Just don't get why we need to clutter the board with 3 different topics that all are discussing the same thing - what we're currently buying/selling.

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Try shorting full-time for yourself and you will understand that it is different from buy/sell thread 8)

 

I don't short full time because I don't trade full time. 

 

But I have shorted and have gone long puts and have profited from downturns and etc and understand that's it's NOT the same action, mentally, P/L wise, risk management wise, etc. 

 

But it is the same topic - buying/selling. And all of the strategy/risk management of buying and selling could still be discussed in the same place

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Shorting is not trading - It is a concentrated investment for me 8)  It's hard to do because we don't have a long threads on this topic compare to easy threads like buying/selling.

 

Trust me there are some many threads already 8)  What's the harm in having one more 8)  The Admins can delete it if I don't add value 8)

 

Lastly, you can just do a PASS on this conversations if it doesn't interest you.  As I'm typing this:  Icahn has a big short position. 

 

Shorting is important and healthy to Mr. Market.

 

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Try shorting full-time for yourself and you will understand that it is different from buy/sell thread 8)

 

This.

 

When I started out, I was basically doing short only. It is an entirely different animal, in every aspect, than any other investment type or strategy. But it teaches you more than I think anything else does, because you literally have to consider EVERYTHING. Fundamental, technical, costs of carry+timing, game theory, incentives and behavioral influence, accounting, etc. You're basically forced to connect dots and then make predicative, catalyst based sell/cover decisions.

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  • 3 weeks later...

time to short life insurers? Or worth buying a put as a hedge if the virus can’t be contained? Possibly health insurers too?

https://www.ft.com/content/b2fb2326-6d13-11ea-89df-41bea055720b

 

I did the calculations below a couple of weeks ago, tried to buy more life insurance and failed. Seems insurance policies are mispriced  for the current environment but can’t be changed now.

 

Unfortunately I understand nothing about life insurers, e.g. is there pandemic  reinsurance they bought from BRK? are the reduced costs of LTC care and annuity payouts hedges for them? Maybe it’s already priced into the put volatility. Actuaries are definitely watching this: https://www.soa.org/globalassets/assets/files/research/projects/resrch-li-mortality-delphi-study.pdf

 

Life insurance is a long investment now! You don’t even pay a premium like you usually would for tail risk hedges.

 

The ask from a reputable life insurer was 0.16% per year for a term policy I could cancel anytime and get without any medical checkups etc, (  probably hard while socially distant). This matches usual mortality risk for my age/sex https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1310071001&pickMembers%5B0%5D=1.1&pickMembers%5B1%5D=3.2

 

The current  “consensus “ numbers for payoff are

80% chance of getting COVID-19 before herd immunity

0.4% chance of dying from it at my age range.

 

Estimated chance of “payoff” = 80% of 0.4%= 0.32%, I.e. double the price.

 

I’ve tried to hit the ask, but the insurance company won’t get back to me. This is a pretty illiquid market and price hasn’t moved yet, but it seems there are no policies on offer.

 

Has anyone else had the same experience?

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Following. 

 

I cant even begin to imagine a candidate.  I can buy puts on big liquid names but these are not companies I would short.  I am just trying to catch a relatively short term action and hedge the rest of my portfolio in the meantime.

 

My understanding of shorting is that one needs to identify something that is in trouble where the herd still believes it has potential, and shorting exactly at the point it is starting to drop.  Shorting based on valuation clearly doesn't work very well.  Tesla being the prime example of this, along with hundreds of others. 

 

There are so many things in this environment that can screw up a short.  Airlines worldwide should go to zero but they wont due to creative bailout methods.  Cruise lines seem obvious but I am not so sure its that obvious.  I dont see the public sector bailing them out, but private investors may bridge them cash until they can operate.  Cruise lines can also anchor their boats with dramatically reduced costs, or do repairs so they get a few years ahead of the curve on maintenance.  And were headed into the off season anyway.  Their biggest costs would be staff, fuel and lease costs.  Two of those would be really low now.  Lease costs could be out off.  So, as much as I hate the industry I dont see cruise lines as a viable short.  And hating an industry is not a reason too short. 

 

Yeah, its harder than it seems.

 

Oil is too badly hit to short now.  Most E&Ps are trading as if they are in bankruptcy already. 

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