I guess I can introduce stop-loss and other cautionary measures to prevent snowballing loss, but shorting is shorting… Wonder if I could resist the urge.

  • dhork@lemmy.worldEnglish
    12·
    3 days ago

    First, don’t try and time the market. The market can stay irrational for longer than you can stay solvent.

    Second, if you ignore the first point, please don’t try and time the market with your rent money. It’s only one step removed from gambling, and you wouldn’t put your rent money on Red on the Roulette table, would you?

    Third, if you ignore the first two points, please please please don’t short anything unless you really know what the hell you are doing. It is like gambling with money you borrowed from the mob. It never ends well, no matter how much you think it will.

    With all that said, I have two better suggestions:

    • read about options trading, specifically about buying put options. It can be safer than shorting, if you don’t fuck it up. I am specifically not writing more because you need to understand them yourself before playing in them.

    • Why are you so pessimistic? Is it because of tech and AI slop? Simply direct your money to mutual funds that don’t invest in tech. (There are S&P 500 funds that explicitly exclude the “Magnificent 7”, and buy the other 493. Every year so far, the full S&P has outperformed it, by a lot. Do you feel lucky?)

    • bamboo@lemmy.blahaj.zoneEnglish
      8·
      3 days ago

      Just to add some more words of caution, when you buy an investment, you can potentially lose up to 100% of your principal, and there is no limit on the amount of money you can gain. When you short an investment, you can lose more than 100% of your principal, and are limited on your gains if the price goes to $0.

      • someacnt@sh.itjust.worksOPEnglish
        2·
        3 days ago

        Yeah, this is exactly why stop-loss exists, and you should ideally open and close shorts pretty quickly.

    • someacnt@sh.itjust.worksOPEnglish
      2·
      3 days ago

      Great points, thanks!! Dunno if it could stop my impulse, but gotta try… Maybe options are safer, I gotta look into it.

      By the way, I think there is no way other stocks would do well if the bubble ever bursts, so I believe it’s better to invest in the bubble if it is not bursting - I actually have some nuclear energy stocks for this purpose. Need to sell them at some point…

      It is impossible to exactly time the market, so I should hold my impulse, but I think there would be chart signals that would show that it is crashing.