Shorting a company is not a trade against the future of a company, it is a trade against the market. You can know a company is going to zero and the company can go to zero and you can still lose your shirt from shorting it.
A lot of people will, if this IPO actually happens. But as is frequently pointed out a short is a market bet not a bet against the company and the market remains wild and irrational. You can be right about the company ultimately failing and still lose your shirt on a short.
However the price of CDS on bonds is already a strong market indication of where the market thinks all of this is heading. And none of that looks good if you’re betting on the AI exuberance continuing.
The bond market and the equity market care about different things. E.g. if the company has a 10% chance of going bankrupt and a 90% chance of doubling its market value, then paradoxically its bonds will look bad and its equity will look good.
You say this as if retirement accounts, and S&P500 ETF’s don’t exist and aren’t very common. Many people were forced into some amount of investment in spacexsi
Shorting a company is not a trade against the future of a company, it is a trade against the market. You can know a company is going to zero and the company can go to zero and you can still lose your shirt from shorting it.
"The market can stay irrational longer than you can stay solvent."
This quote stops me from shorting pretty much anything.
A lot of people will, if this IPO actually happens. But as is frequently pointed out a short is a market bet not a bet against the company and the market remains wild and irrational. You can be right about the company ultimately failing and still lose your shirt on a short.
However the price of CDS on bonds is already a strong market indication of where the market thinks all of this is heading. And none of that looks good if you’re betting on the AI exuberance continuing.
The bond market and the equity market care about different things. E.g. if the company has a 10% chance of going bankrupt and a 90% chance of doubling its market value, then paradoxically its bonds will look bad and its equity will look good.
When you've got companies like Tesla valued at what they're valued at. Shorting is pretty dumb.
Shorting is not the only way to protect yourself from a bad investment.
You can simply not buy shares in companies you think are on a doomed trajectory.
That said, depending on the IPO target price, I might short it.
You say this as if retirement accounts, and S&P500 ETF’s don’t exist and aren’t very common. Many people were forced into some amount of investment in spacexsi
Which is beyond the point. I was replying to someone that mentioned shorting Anthropic if you think it is a bad investment.
I presume they are not playing with shorting with your retirement account?