[kombuchakid]

print this out and read it daily....its better then the book

+++
and if you must go the Mark Six route, bet a single set of numbers every time; that is the same six numbers and only bet the single $5 ticket.

[kombuchakid]

I had actually meant to upload the summary which is worth printing out

[kombuchakid]

the summary in question

[HKNewBi]

Originally Posted by freeier

hence, in such scenario, u are not going to win anything by shorting, so why would anyone want to take such a one sided bet ? 8-P

8-P

But that is only one extreme scenario of global meltdown. In which case it matters little if you went long or short as all you will be left with is worthless paper.

If you can predict a bear market (and why should that be any harder than a bull market) then going short can make you a quick fortune. But of course bet the wrong way and the loses can be equally grim. But to say you can't make money on short positions is obviously a nonsense.

[freeier]

Originally Posted by HKNewBi

But that is only one extreme scenario of global meltdown. In which case it matters little if you went long or short as all you will be left with is worthless paper.

If you can predict a bear market (and why should that be any harder than a bull market) then going short can make you a quick fortune. But of course bet the wrong way and the loses can be equally grim. But to say you can't make money on short positions is obviously a nonsense.

hmmm... that was suppose to be quite sacarstic against bi1000...
let's put it in perspective
he started saying that there are tonnes of market crashes and it took the 1929 crash 25 years to get back the original value, so that was your argument that we should not go into equities or properties because will get burnt.
we should take the extreme view, buy commodities and short all financial stuffs...

so now u are saying that such a crash is only very rare but we shld still go into comodities and short financial futures ?

i never say short position cannot make money. in fact i do use short position quite regularly to hedge what i perceive as over exposure in equities. and of course i'm quite at ease with the normal types of options..

[HK_Newbie100]

as said, it’s all a matter of opinion, and you place your bets accordingly.

It just seems the risk/reward ration for buying stocks and property is not looking good – upside seems very limited, but downside unlimited. That being the case, if you had to take a general market position, and you had a negative outlook, why would you open up a new long position? Why not short? It’s no different to going long. You can make money either way. All trading/investing (whatever you want to call it) is just an up or down bet. And I mention commodities (gold the best example) because they have historically moved inversely to stocks. They are as easy to buy as stocks and may well perform very well (some say go through the roof) if stocks are about to falter (recent market activity?).

As to markets not being zero sum, there’s some misunderstanding here. Every buy is balanced by a sell. No trader can profit without another trader losing.. The net sum of profits measured against losses is zero, hence zero sum. If you short say the Dow and it subsequently falls 90%, then your opposite number will lose that amount of his investment to you. You will realize every cent of his losses. You do not hold worthless paper. That’s why in times of financial crises, there will be a small number of big winners that soak up the losses of the majority eg George Soros making £1 billion in Sterling crisis vs the Bank of England losing billions.

[HKNewBi]

That isn't true as companies can create wealth. The market capitalisation of, say, the London Stock Exchange is greater now than it was 20 years ago.

Also shareholders receive dividends. There is obviously a gain if you receive a dividend payment. Who is the loser in this situation?

[freeier]

so precisely like what hknewbi has said, the market grows. with more wealth created and dividends given. so in the long run shorting any share goes against the common logic of 'investment' because u are pitting youself against an economy that has to inflate.

anyway i am not against shorting. i used to get paid to trade for the bank so these are basic instruments i use. I think the more sensible way wld be to do a pair long and short and extra the alpha out of good underlyings. naked short ? that's too event dependent and unless u are very informed i don't encourage that much

[HKNewBi]

Originally Posted by freeier

naked short ? that's too event dependent and unless u are very informed i don't encourage that much

And if you are very very informed you would know that naked shorting equities is illegal in most cases.

[freeier]

Originally Posted by HKNewBi

And if you are very very informed you would know that naked shorting equities is illegal in most cases.

for the avoidance of doubt, when i say naked short i meant economically a short that is strictly one sided. i.e. you can borrow shares to short and it is still naked.

on the other hand a covered short implies one that u have a long position in another equity or index etc so you won't get hit when the market systematically rally.

anyway, u can naked short. even in your interpretation.
just do it over futures. its one very good way of managing your overall positions.