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: petal who wrote (65599)	12/5/2020 6:23:13 PM
From: Paul Senior	2 Recommendations Recommended By IntoOLEDs sjemmeri Read Replies (1) \| Respond to of 78797

I will have a different opinion. Since this is a presumed Graham value thread, I believe he might say leave short-selling to the professionals. Short selling would never be "a presumed requisite for the prudent investor", no matter how high the market. Two reasons: 1. The standard. "Your loss is limited to your investment in the standard trade, but your losses could theoretically be unlimited with a short sale gone wrong". So... if somebody risked 10% of their portfolio on the standard trade, their max loss would be 10% (assuming the 90% remains steady), but their loss could be maybe much higher than 10% of their portfolio if the short sale goes against them a lot. 2. Short-selling requires a much different mindset than with value investing. It's not just about buying undervalued and turning the idea around and simply selling (shorting) over-valued, even egregiously overvalued. As in walking: it's one thing to walk forwards, quite different & not the same when trying to do the opposite and walk backwards. ==================== 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. If you are saying, with regard to "general market shorts", you mean shorting a sector, say for example, like cloud computing stocks, or shorting the general market in anticipation of the Dow or S&P falling, maybe you are right. Or maybe you are reminded of Mike Burry's famous trade where he got in before everyone else. That I believe was a special case. In my limited experience with short-selling, I've found the best shorting opportunities with specific companies occur AFTER everyone believes it's a crisis. The stock drops, but not far enough, and that still leaves room for further shorting. An example of this is the fall of GE -- the crisis was public, the stock had fallen and was falling, but it was still at $25 at then $20, and still an opportunity to bet on a further fall. A safer bet, imo, than shorting something at what seems to be a peak, but may not be.