Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (65592)	12/5/2020 11:36:39 AM
From: RetiredNow	1 Recommendation Recommended By E_K_S Respond to of 78794

It's worth the thought. I usually do investing in pairs. For example, when I bought some gold miners, I also bought materials miners. My thinking is was that both have asynchronous upside potential, but gold can act as a hedge against other commodities and stocks in general in environments like this. Since then, my materials miners have done great and my gold miners have barely budged. Interesting dynamic. Right now, I think growth and large cap is way overvalued, so a short play on select stocks there could work, but also can be dangerous because of the momentum trading that happens there. Then value stocks, small, and mid cap look historically very cheap, so going long looks right there. So as a pair trade, that might work. Go short large cap growth and long small cap value. If you lose on the large cap growth, then that should be offset by gains in small cap value. But you have a good chance of winning at both, if the rotation trade continues to pan out. Anyway, I don't do shorts myself, but just a thought.

To: E_K_S who wrote (65592)	12/5/2020 1:40:56 PM
From: FIFO_kid2	4 Recommendations Recommended By beagle57 E_K_S Nya_Quy The_Commodore Respond to of 78794

It certainly looks tempting to short stocks but realize you are currently fighting the loose cannon money printing bandits which have been the main driver of this euphoric market. I think in this market I think forensic shorts where you think there is obvious fraud is going on and being a whistleblower to the big wigs like Carson Block, Marc Cohodes or Jim Chanos to do the dirty work promotion for you is the route with the least risk. While fad shorts are excellent timing the top is challenging. Generally, I prefer shorting fad companies that have really no benefit to society based upon a fashion or activity craze or in a business with a high cost structure and obsolescence risk. If you do it keep your position initially at 1 % with the option to go to 3% if you pick 2 names with 2 scales and up to 5% with 3 scales if you pick one name otherwise it is going to be too risky for my taste. I would also hedge the position with a competing technology if you believe it will be mandated. Nothing would be worse if fuel cells become the next Tesla. One thing about fuel cells to be cognizant about is that technology solves the materials shortage dilemma with EVs if the product were to exhibit a major ramp up. Personally, I think it is much better to consider this strategy when there is Federal reserve tightening and the market breadth starts to falter.

To: E_K_S who wrote (65592)	12/5/2020 4:47:31 PM
From: petal	Read Replies (1) \| Respond to of 78794

I think that a ~10 % short portfolio, when the market is above PE 20, should be a prerequisite for any prudent investor who (on somewhat good grounds, since that bull market may keep going for a while, especially when it's gov't-subsidized) wants to stay in the market. Remember, to get anything out of your general market shorts, you have too be in them before everyone gets it. If you get in when everyone believes it's a crisis, you're too late; there's no foresight left to gain from. You have too see the crisis coming. However, shorting a specific stock is tricky, especially if you're a "cult company". I started shorting TSLA seriously around the peak in August. From looking at several other stocks in "complete bubble mode", nothing would have indicated that the stock would have another rally. I still believe in the "play" though, and added to my short. The key, I believe, when it comes to shorts, is patience, even more than with normal value plays (although the time period may be a little shorter, your losses will be way more severe). If nothing has changed, and it keeps going down, you have to believe in your judgment, even though the market has gone even more crazy. The key ground rule is 'never make a single short a large part of your portfolio'. P.S. A long/short strategy has never looked more compelling, in my mind, since the lion's share of the market looks waaay overvalued, and a big part of the rest of it looks way undervalued.