Comment by bamboozled

9 hours ago

You'd be crazy not to be nervous about it from what I've heard, seen and read in the last 6 months.

>from what I've heard, seen and read in the last 6 months.

Except they've been saying that for the last 2-3 years.

I have lunch with a friend every 2-3 weeks, and he self-manages his retirement, and he's retired. It was ~2.5 years ago that he said "A lot of the financial news guys I follow say there's going to be a crash in the next 3-6 months."

At every lunch we've been following up on that, and it just hasn't crashed yet.

I'm not saying it won't, I'm not saying it's risky, but just getting out of the market is not an ideal solution either.

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  • Why do people persist in repeating this dumb meme? Tyler Cowen, who should really know better, does it too. To be profitable shorting, you have to not only be right about the direction of the market but you have to time it precisely. Shorting is not 'I think the market is going to decline at some point in the future', or else we'd all do it.

    You're borrowing to short, and your broker can call your loan at any time for any reason or no reason at all, including 'our risk algos felt nervous this afternoon'. If you try to short a stock or ETF and the market surges in a dead cat bounce before declining, you get completely wiped out even if you're going to be eventually right

    • I going to defend Zoltan here and say the comment they responded to had about the same level of thought. "I read the market is overvalued" is no different than asking about short positions. I've been reading about the market being overvalued for like a decade at this point, meanwhile we've had the longest bull market in history. I feel for all the people who have been sitting cash all this time because they heard somewhere things were overvalued.

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    • >> To be profitable shorting, you have to not only be right about the direction of the market but you have to time it precisely.

      It's even worse than that, you also have to get the price right. If everyone wants to short the same stocks, it's going to be expensive to do so.

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  • There’s no such thing as an easy short. Going short doesn’t mean predicting a downturn, it means being precise in your predictions about when that downturn will happen. Look at the last few major stock market drops and try to retrospectively time when they would happen from the moment all of the underlying causes of the upcoming crash became apparent: in most cases you get a huge range of values.

  • As John Maynard Keynes supposedly said, and I've seen play out over the past quarter century, "Markets can remain irrational longer than you can remain solvent."

  • Cheap shot. Going long is easy, going short is very risky even if you get the general trend right.

  • John Maynard Keynes — 'Markets can remain irrational longer than you can remain solvent.'