Turn on thread page Beta
    • Thread Starter
    Offline

    14
    ReputationRep:
    (Original post by Thornton)
    I don't want to be dragged too far into an argument, and SevenDeuceOff seems to have addressed most of your issues, but I do find the claim that a suffering economy is going to have a strong currency quite bizarre.

    More importantly, you'll find that I said "unless you're highly informed/intelligent, shorting as part of a trading strategy, you might as well just go and gamble in a casino". When spoken aloud, the second comma should have the longer pause... if you get my drift. I apologise if my use of English was not clear enough to you.
    That said, I assume you're just a student who thinks that you're cleverer than the market and 'know' that stocks will fall. You may have an expensive lesson to learn...

    Best of luck with your bet. In the meantime, I'm happy with my investments, whereby I provide companies with capital which they use productively (e.g. in BP's case, digging for and selling oil) to generate a return.
    Risk for shorting = risk for longing, its the same ****.

    Yes, I do know what BP does, but I bet you have never even checked a cashflow statement. You aren't gonna get a spring week with that mentality.
    Offline

    0
    ReputationRep:
    Risk for shorting and risk for longing are not the same in the long run - stockmarkets have a long term tendency to rise, thanks to growth in productivity/inflation.

    Of course I have checked income statements and looked at cashflow - I wouldn't buy shares in a company that I didn't have some good idea of what their financial situation is.

    And finally - of course I agree with you that it is possible to make money trading in the way you seem to be doing, (as you earlier gave the example of some highly successful traders at Goldman). However in these sorts of trades there are always going to be two sides, and I personally doubt I am likely to be clever and informed enough to regularly outsmart the average trader in the market. Perhaps you are just cleverer than I am, or have a higher tolerance for risk.

    And I may not get a spring week with that mentality - I don't have any offers or rejections as yet, but I have had interviews (and in one case multiple rounds of interviews) for spring and summer internships, so I'll just wait and see.

    (This is my last post on the topic, but thanks for some interesting debate)
    Offline

    0
    ReputationRep:
    (Original post by LoZEr)
    Risk for shorting = risk for longing, its the same ****.

    Yes, I do know what BP does, but I bet you have never even checked a cashflow statement. You aren't gonna get a spring week with that mentality.
    If you're short, your losses are unlimited.

    If you're long, your losses are limited.

    The risk is clearly not the same.

    You aren't going to get a spring week with that lack of basic understanding.
    • Thread Starter
    Offline

    14
    ReputationRep:
    (Original post by roussell)
    If you're short, your losses are unlimited.

    If you're long, your losses are limited.

    The risk is clearly not the same.

    You aren't going to get a spring week with that lack of basic understanding.
    Most likely, thats in the very long term. An investor doesn't have to leave their trade on forever lol. Anyways, I assumed people trade with common sense; stop limits???
    Offline

    2
    ReputationRep:
    LoZer, did you just compare your random, naive, poorly-informed, proposed punt on shorting FTSE based on some kind of baseless stagflationary macro view to what a couple of now infamous traders on a structured desk at Goldman did in '07? And in an extremely patronising tone to an actual FI trader trying to merely give you some advice?

    Guess nothing's changed on this crappy forum - whatever lol.
    • Thread Starter
    Offline

    14
    ReputationRep:
    Yes, thats exactly what I did. Obviously you have to look at a lot of other stuff when deciding to invest, but I was trying to get a feel for the broader picture. Patronising? Geez, its an internet forum... What bank do you trade for?

    SevenDeuce, instead of telling people that they punt based on baseless stagflationary macro views why don't you tell me what bet you would do if you were in a hedge fund position instead of just copying and pasting what you see on the FT? So far no one on this thread has come up with anything. Comon dont be shy tell us what fantasy punt you'd make and why so someone else can call it random, naive and poorly-informed.

    You're right. This forum is full of bollucks these days.

    Anyway, it will be interesting to see in 6-12 months time where the ftse will be. 27th Jan = 5217
    Offline

    2
    ReputationRep:
    (Original post by LoZEr)
    Yes, thats exactly what I did. Obviously you have to look at a lot of other stuff when deciding to invest, but I was trying to get a feel for the broader picture. Patronising? Geez, its an internet forum... What bank do you trade for?

    SevenDeuce, instead of telling people that they punt based on baseless stagflationary macro views why don't you tell me what bet you would do if you were in a hedge fund position instead of just copying and pasting what you see on the FT? So far no one on this thread has come up with anything. Comon dont be shy tell us what fantasy punt you'd make and why so someone else can call it random, naive and poorly-informed.
    Having a view and the conviction to trade it is fine if you can 1) make a sound argument why, 2) you do a trade that cleanly expresses that view and 3) provided you fully understand the risks involved.

    1) I never said I think shorting FTSE is necessarily a bad trade; my issue is that the reason (above target inflation will force BoE's hand and surprise the market) you gave for doing it was terrible.

    2) If you trade the view that uk equities are going to be more constrained relative to other highly-correlated stock markets due to more constrained monetary policy, then this should be a spread trade vs a country you think isn't as such constrained. The FTSE will be exposed to so many other factors/macro risks than the uk base rate, and many of these are shared by all other world equity markets.

    3) Shorting something via CFD/spreadbetting cannot be compared to an investment in a stock or bond; it's leveraged and returns are hence much more volatile, stop-loss or not.

    Anyway, it will be interesting to see in 6-12 months time where the ftse will be. 27th Jan = 5217
    No it won't, it's easy to be a rainmaker. If the FTSE tanks, congrats, you made it rain, even though you have no meteorological knowledge. It's the reason behind the view that should be assessed...
    • Thread Starter
    Offline

    14
    ReputationRep:
    Yes there are lots of factors such as commodity prices which will affect every index (e.g. lower metal prices and miners). But why can't the greater picture be as simple as saying inflation = bad? BoE says inflation is temporary, I believe it isn't -> affects of QE and Government debt.

    "David Buik, partner at BGC Partners, said the uncertainty of world governments being prepared to deal with debt underpinned the falls on the index.
    The world needs to wake up and smell the coffee. If this debt is going to be dealt with all at the same time, yields go up. Who pays? The taxpayer. (This means) less disposable income, a fall in retail (and) no growth, he said."

    "The MSCI Emerging Markets Index fell 2.6 percent to 902.12 as of 5 p.m. in Hong Kong, the lowest since Oct. 2. The gauge of 22 developing nations, which rallied a record 75 percent in 2009, has slumped 12 percent from this year’s peak on Jan. 11, entering a correction, on speculation central banks from China to Brazil will start to raise borrowing costs to curb inflation. ....(UK will soon follow)

    Recoveries have been reliant on policy measures, said Michael Auyeung, who manages about $500 million as chief investment officer at Pacific Mutual Fund Bhd. outside Kuala Lumpur. As we move into the transition phase where the burden of growth shifts back towards the private economy on stimulus withdrawal, we will start to get a better idea of how bad the damage has been to the structural integrity of the financial and business architecture. We may not like what we find.”

    With regards to 3), I never said I would be spreadbetting at all. But I do understand the risks with leveraged spreadbets. I was purely saying what I'd do if I had to make one trade and I was a hedge fund manager.
    Offline

    0
    ReputationRep:
    9.7%, cover you negative *******'s
    • Thread Starter
    Offline

    14
    ReputationRep:
    (Original post by toothpick)
    9.7%, cover you negative *******'s
    overshadowed by deficit. Anyway, we talkin uk not us
    Offline

    0
    ReputationRep:
    (Original post by LoZEr)
    overshadowed by deficit. Anyway, we talkin uk not us
    say what blud?
    Offline

    0
    ReputationRep:
    (Original post by LoZEr)
    Most likely, thats in the very long term. An investor doesn't have to leave their trade on forever lol. Anyways, I assumed people trade with common sense; stop limits???
    You can make whatever assumptions you like, but to claim short risk and long risk are equivalent demonstrates a basic misunderstanding. And stops mean jack in an illiquid market. Try finding a bid in 10s30s EUR on Monday morning, not going to happen.
    • Thread Starter
    Offline

    14
    ReputationRep:
    (Original post by roussell)
    You can make whatever assumptions you like, but to claim short risk and long risk are equivalent demonstrates a basic misunderstanding. And stops mean jack in an illiquid market. Try finding a bid in 10s30s EUR on Monday morning, not going to happen.
    True, but if you're short and no one wants to buy, then is the risk now not unlimited? Who's going to push the price up.
    Offline

    2
    ReputationRep:
    Risk from longing a vanilla asset like a stock or bond in the cash market is limited to your original investment; the same for a short position is theoretically unlimited. In leveraged products like CFDs/spreadbetting/futures, you can lose more than your original investment whether long or short, and like-for-like volatility of returns is much higher.

    The last kind of person you ever want near a trading floor is someone who argues but doesn't listen to those who know better, who doesn't acknowledge when they're wrong and who tries to act like they know more than they really do...
    • Thread Starter
    Offline

    14
    ReputationRep:
    (Original post by SevenDeuceOff)
    Risk from longing a vanilla asset like a stock or bond in the cash market is limited to your original investment; the same for a short position is theoretically unlimited. In leveraged products like CFDs/spreadbetting/futures, you can lose more than your original investment whether long or short, and like-for-like volatility of returns is much higher.
    congrats, you've literally just repeated what has already been said but havent answered my question. If someone is short there will only be unlimited risk if there is a demand for that stock. If no one wants to buy that stock, then theoretically there isn't unlimited risk, no?

    (Original post by SevenDeuceOff)
    The last kind of person you ever want near a trading floor is someone who argues but doesn't listen to those who know better, who doesn't acknowledge when they're wrong and who tries to act like they know more than they really do...
    I'm just challenging. Besides I would never talk the same way on a public internet forum as i would on a trading floor, and I'm sure others would agree. Just because I question what has been said doesn't mean im not listening and im not in the wrong. You should't judge someone's personality by what they type.
    Offline

    2
    ReputationRep:
    (Original post by LoZEr)
    congrats, you've literally just repeated what has already been said but havent answered my question. If someone is short there will only be unlimited risk if there is a demand for that stock. If no one wants to buy that stock, then theoretically there isn't unlimited risk, no?
    At that very precise point perhaps. But there is nothing to stop the situation changing very rapidly, say if a bunch of in the money options nakedly sold expire at that point. Then you might be subject to a squeeze (a la VW) and up the creek without a paddle.

    So fundementally there will always be more risk short a stock than long, just because it is impossible to guarantee things won't change in a very very short space of time.
    Offline

    2
    ReputationRep:
    (Original post by LoZEr)
    congrats, you've literally just repeated what has already been said but havent answered my question. If someone is short there will only be unlimited risk if there is a demand for that stock. If no one wants to buy that stock, then theoretically there isn't unlimited risk, no
    I chose to ignore it because it was an incredibly dumb question, and judging from previous responses, all you'll do is argue instead of listening. Quite frankly, with your arrogant attitude, you don't deserve help.

    Demand is stochastic... price evolution is stochastic...
    • Thread Starter
    Offline

    14
    ReputationRep:
    (Original post by SevenDeuceOff)
    I chose to ignore it because it was an incredibly dumb question, and judging from previous responses, all you'll do is argue instead of listening. Quite frankly, with your arrogant attitude, you don't deserve help.

    Demand is stochastic... price evolution is stochastic...
    hahaha thanks for an incredibly dumb answer. Demand isn't stochastic if there is NO demand
    Offline

    2
    ReputationRep:
    /facepalm
    Offline

    13
    ReputationRep:
    (Original post by SevenDeuceOff)
    /facepalm
    he's right you know :ahee:
 
 
 
Reply
Submit reply
Turn on thread page Beta
TSR Support Team

We have a brilliant team of more than 60 Support Team members looking after discussions on The Student Room, helping to make it a fun, safe and useful place to hang out.

Updated: February 13, 2010
Poll
Which accompaniment is best?
Useful resources

Articles:

Guide to investment bankingGuide to consultancy

Featured recruiter profiles:

Deutsche Bank logo

Deutsche Bank is recruiting

"Thrive in an international banking environment"

Quick link:

Unanswered investment banking and consultancy threads

Groups associated with this forum:

View associated groups

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Write a reply...
Reply
Hide
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.