The Perils of Shorting: A Real Life Example

Thanks for completely ignoring my posts Colm.

Very disappointing.

Similarly, I will not be engaging with you either from here on in.
 
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:oops:my thinking has moved on. Gambling has a subjective element. If I were to short Tesla or any other stock I would be gambling as I believe in the EMH. I shorted bitcoin at over 14000, only short I ever undertook, I did not believe I was gambling. Colm does not think shorting Tesla is gambling, ergo he isn’t gambling.:)
 
Thanks @Colm Fagan for such a detailed response, I do wish you well on your Tesla short. I will be keeping an eye on the market to see how you fair out, I'm not closed minded and ultimately these debates help me learn for myself and it's something I may consider doing if I feel strongly about a company like you do.

And @Duke of Marmalade thanks for the information, learned some info from your replies on both this and other thread, I'll have to take a longer look at long positions at spread companies to see if it's viable alternative consider that there is no tax implications , could be a loop hole although I'm sceptical!
 
Duke of Marmalade said:
:oops:my thinking has moved on. Gambling has a subjective element. If I were to short Tesla or any other stock I would be gambling as I believe in the EMH. I shorted bitcoin at over 14000, only short I ever undertook, I did not believe I was gambling. Colm does not think shorting Tesla is gambling, ergo he isn’t gambling.:)
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Can't have it both ways if shorting is not gambling going long is not investing.
 
Duke of Marmalade said:
:oops:my thinking has moved on. Gambling has a subjective element. If I were to short Tesla or any other stock I would be gambling as I believe in the EMH. I shorted bitcoin at over 14000, only short I ever undertook, I did not believe I was gambling. Colm does not think shorting Tesla is gambling, ergo he isn’t gambling.:)
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I know a guy who lost 5 k on a Galway v mayo match a few years ago and tends to be either in a terrific or foul mood after the weekends premiership , his cousin ( who is my neighbour) told me earnestly one day that said four figure wager maker "isn't a gambler"
 
galway_blow_in said:
I know a guy who lost 5 k on a Galway v mayo match a few years ago and tends to be either in a terrific or foul mood after the weekends premiership , his cousin ( who is my neighbour) told me earnestly one day that said four figure wager maker "isn't a gambler"
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I'm fond of the odd punt myself. If the unit of currency is cents I too punt in four figures. I think I regard each individual punt as an investment - I do think I have spotted good value. However, the empirical evidence of an accumulated loss suggests that I am really a gambler, I just don't recognise it at the point of making the punt. Fella believes Colm is gambling on Tesla but, to bring closure to this sidebar, I am trying to persuade him that to Colm a Tesla short is not a gamble.
 
Hi Fella

My original view was that spread betting was betting i.e. gambling. I was firmly of that view.

It took a long time for me to understand and accept that spread betting a long stock for the long-term was very close to buying the stock itself.

So instead of buying 1,000 Ryanair shares, I go long on 1,000 shares. But I must have the €13,000 behind it.

Any other use of it is gambling. (Apart from the very rare occasions where a stock is overvalued to a huge extent.)

Brendan
 
Brendan Burgess said:
So instead of buying 1,000 Ryanair shares, I go long on 1,000 shares. But I must have the €13,000 behind it.

Any other use of it is gambling.
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Gosh, Brendan, it that not being too dogmatic? Long spread bet with 0% leverage is investing, but long spread bet with 1% leverage is gambling?
 
Colm Fagan said:
Gosh, Brendan, it that not being too dogmatic? Long spread bet with 0% leverage is investing, but long spread bet with 1% leverage is gambling?
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I think the Boss can't really get the title financial spread betting out of his head. If a transaction on the FSB markets is deemed gambling then the exact same economic proposition in the conventional markets must also be gambling. Boss is effectively saying that any geared investment is gambling, and perhaps that's what he means.
 
No, that is not what I mean at all.

My problem was with the word "betting" but I have got over that.

But most people do use spread betting for betting i.e. gambling.

I would also consider borrowing to invest in shares as fairly close to gambling. That is why I think that leveraged spread betting is gambling.

Brendan
 
About a decade ago now I was posting on an American gambling forum , there was a guy who claimed to be making money on football handicaps (American football) , he was convinced he could beat Pinnacle ( one of the best sportbooks in the world at the time who never close anyone's account ) .
We were in similar disagreement I believed he had to beat Pinnacle line pre game to be a winner he didn't , he bet 1.95/1.95 lines on the handicap , we agreed on a large bet between us straight up over the season , I barely knew the rules of NFL but I have seen thousands of professional arbers who lay excess on betfair been net betfair losers and I was aswell over hundreds of thousands of bets . Win and bookies lose at betfair , you can't beat efficient markets that are liquid .

Anyway he took whatever line he wanted on any and every game all season and got the 1.95 and the deal was I got the opposite side at 2 (evens ) , well it didn't take long for me to get consistently ahead and he paid me out 3/4 way through the season out of embarrassment.

It's easy to beat a bookie but to beat a market that is openly traded and liquid it's almost impossible long term , definitely gambling unless you have knowledge that is not in public domain, Tesla is also one of the most shortest stocks if not the most.
 
Fella said:
you can't beat efficient markets that are liquid .
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I agree with you in theory, but the timescales for determining success or failure in business are much longer than those required for determining winners and losers in horse races or football games. This fundamental difference makes comparisons misleading. Fundamentals ultimately prevail in business. It may take years, but they are sure to in the long-term. That's a racing certainty :)

The time required for fundamentals to prevail is longer than the time horizons of the vast majority traders, for whom this year's bonus is often the main driver of behaviour. Also, I don't have to answer to outside investors nor to a Board of Directors (I tell my other half very little of what's going on!). Not having pressures for short-term results allows me to make decisions that I think will deliver good long-term results, even if there's the occasional blip, as there was at Halloween for Tesla.

In investment, as in business, doing what is right in the long-term, even if it's costly in the short-term, is the recipe for enduring success. At least that's what I think, and results to date haven't proved me wrong. I agree that the last ten years have been generally good for stock markets, so it's been relatively easy to do well in absolute terms over that period, but I've also done well in relative terms, at least over the last five years. I do realise though that there are some out there who believe that I haven't demonstrated good performance for anything near long enough to reach a definitive conclusion. They're probably right.
 
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Out of curiouristy Colm, have you ever done a back testing exercise on your portfolio especially as you say it hasn't changed much?
 
Is this what you're looking for (from #38 in this thread) ?
Colm Fagan said:
The figures I quoted earlier (>10% a year average since December 2010) for the ARF were money-weighted, not time-weighted. It would be difficult to compare them with published figures for unitised funds without going to a lot of effort.
From the start of 2014, I have kept detailed records of the performance of my total portfolio, which includes the ARF/AMRF, some non-exempt investments, a deposit account, and spread bet accounts (including my shorts). Those records are sufficiently detailed to allow me to calculate time-weighted as well as money-weighted returns, so I can compare the overall return with those available from published unit funds.
I looked at the website rubiconic.ie. The best performing fund over the five years to end October delivered a return of 8.5% a year. The average return for seven funds from various companies was 7.4% a year. My overall portfolio performance averaged 8.7% a year over that same 5-year period. That is net of all charges, including the ARF/AMRF charges by the ARF administrator, all stamp duty, commission, withholding taxes, etc. It's also net of the bid-offer spreads when I'm buying or selling shares, and even bank charges on ARF withdrawals.
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By the way, I think that the "it hasn't changed much" is part of the reason for the good performance. I try to minimise the amounts wasted on switching between investments. In some ways, that's a vindication of @Fella 's view that the market is always right. If stocks A and B are both priced correctly in the market, switching between A and B is equivalent to throwing money down the drain.
 
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I actually really like the truck also , I think they will be huge could really appeal to younger people and those going through a mid life crisis like me !
I'm not going to buy the truck but today I did go long on Tesla its not a rational investment but I do like what I've read about Tesla since Colm started the thread . It makes up well less than 1% of my investment portfolio and its just for some interest.
 
@Fella You should have done your long trade with me, since I increased my short position at the open today. It would have saved us both a few bob in brokerage costs and bid-offer spreads!
In answer to @Andrew365 , my plan at the moment is to ignore price movements - in either direction - between now and when the full year results are published, probably at the end of January. In the meantime, I won't get too excited or depressed by moves in either direction. Massive short-term volatility is par for the course with Tesla.
 
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