and shorting something priced in a currency is effectively going long on the currency as well. If the USD takes a dive due to, idk, increasing populism from both major parties, stocks will do quite well in nominal terms. Your shorts will burn and you'll end up far worse than just staying in cash.
For most people, the best way to short is to just hold cash equivalents like short-term treasuries.
I’d change to “can be the same as being wrong” and agree. All these people out there thinking their being oh so clever with bubble this short that etc. Everyone knows.
One of the idiosyncrasies of modern human society is that we’re pretty good at knowing how things we create or initiate can go wrong, particularly with the economy. We’re just not great at perfectly understanding the degree of risk or the probability or at what point/level it goes wrong. That’s why I’ve never really got all the chat of “economists have predicted xx of the last x recessions yadda yadda”. I’m fine with that, I’d be more concerned if they predicted 0 of the last x recessions.
Your quote is something that AI mania speculators often like to reassure themselves with, but consider the fact that it took 17 years for the NASDAQ to recover from the dotcom bubble when adjusting for inflation. What's being early by a year or two when the consequences take decades to heal over?
My understanding is that an extremely OTM put on a clear, strongly held thesis would be Burry-like, and many people would be able to do so.
But Taleb's point is that (non-insiders) cannot accurately predict regarding individual securities (hence derivatives), but can identify over-/under-priced OTM options — and that, trading these systematically, one can suffer many repeated "small" losses that become outweighed by the Big One that eventually (yet unpredictably) hits, thus generating overall positive expected value. But, as I further understand Taleb, most people don't have the huge capital that enables such a strategy, and that doctors, lawyers, dentists, etc., are better off making money by plying their professional services and perhaps investing in index funds and the like.
I got in on 4 of the big quantum computing stocks ~a month ago. I haven't felt this good about a short since Nikola; one of the few times I will use "money left on the table".
I miss Hindenburg.
Unfortunately, most of the scammiest companies (e.g. ones you hear about on HN) are not IPOed, so you can't short them using traditional methods. I'm glad the article points out some non-traditional ones, but I'm not clear on how to actually do it.
Do you ever pair trade or hedge your shorts by buying indices? For example, short the quantum stocks but buy NASDAQ index (or call options) in case everything keeps going up?
Hard to say, because most of what I own is indexes. I do explicitly do an inversion of this: Counter my index positions of certain stocks I don't want to own by shorting them in small amounts. So, these shorts are a hedge, vs a stock I think is worthless/fraud like the QC ones.
What do you want quantum to do? I thought it's good for medicine discovery and material discovery, where you might simulate physical quantum processes, but it's quite theoretical that we actually get an outcome from that isn't there? Is there any drug/protein/molecule simulation that people are trying to do but classical hardware is too slow to bother?
Qubits are neat and all I just won't be places bets.
Readit News
For most people, the best way to short is to just hold cash equivalents like short-term treasuries.
One of the idiosyncrasies of modern human society is that we’re pretty good at knowing how things we create or initiate can go wrong, particularly with the economy. We’re just not great at perfectly understanding the degree of risk or the probability or at what point/level it goes wrong. That’s why I’ve never really got all the chat of “economists have predicted xx of the last x recessions yadda yadda”. I’m fine with that, I’d be more concerned if they predicted 0 of the last x recessions.
But Taleb's point is that (non-insiders) cannot accurately predict regarding individual securities (hence derivatives), but can identify over-/under-priced OTM options — and that, trading these systematically, one can suffer many repeated "small" losses that become outweighed by the Big One that eventually (yet unpredictably) hits, thus generating overall positive expected value. But, as I further understand Taleb, most people don't have the huge capital that enables such a strategy, and that doctors, lawyers, dentists, etc., are better off making money by plying their professional services and perhaps investing in index funds and the like.
It's pretty clearly not a "how to" that ordinary people can practically use. More like "How someone else might do it."
I miss Hindenburg.
Unfortunately, most of the scammiest companies (e.g. ones you hear about on HN) are not IPOed, so you can't short them using traditional methods. I'm glad the article points out some non-traditional ones, but I'm not clear on how to actually do it.
Qubits are neat and all I just won't be places bets.
I bet there's an entry in some dude's journal from the 1100s