Posts filed under “Short Selling”

Why Is It So Hard to Call a Market Top?

Each morning, I go through a similar routine: I wake up (no alarm clock), go to the kitchen to get a cup of coffee (this is my machine of choice lately), launch a script that opens 40 or so Firefox tabs. As part of my morning research, I quickly scan this series of websites to see what happened over night, and what might be interesting.

Part of that list is Jason Zweig’s “This Day in Financial History,” which led to this morning’s gem: Today in 1997:

The Dow Jones Industrial Average closes above 7,500 for the first time, and The Wall Street Journal notes that the market’s climb ‘seems to inspire equal parts awe and dread among many investors.’ Fred Taylor, CIO at U.S. Trust, guesses that the stock market will end the year “lower than its current level.” (The Dow finishes 1997 at 7908.25, or more than 5% higher.)

Which leads to today’s question: Why is calling a top so much more challenging than seeing a market bottom?

I don’t think many traders would disagree with that notion. It is often said that “Tops are a process while market bottoms are an event.” Or as Michael Batnick observed, “Bull market tops are more difficult to call than bear market bottoms because doubt is a far more resilient emotion than hope.”

Allow me to rephrase that without any of the lovely subtlety I am known for: The dominant emotion at bottoms is fear — a palpable and very recognizable state. Tops on the other hand, come about through the combination of greed, complacency and indifference. This is a much more challenging set of factors to identify. Indifference does not cause a huge spike in VIX, a standard measure of market volatility; volume does not increase as traders become complacent.

There are many other forces at play: Continues here

Category: Investing, Sentiment, Short Selling, Technical Analysis, Trading

It’s a Tech Bubble! Unless You Care About Earnings and Valuations

Earlier this week, Greenlight Capital hedge fund manager David Einhorn reignited the bubble debate that we have spilled so many pixels dissecting. The shorter of Lehman Brothers and the New York Mets fan said in a quarterly letter to clients “we are witnessing our second tech bubble in 15 years.” The Bubble Chatter is nothing…Read More

Category: Hedge Funds, Psychology, Short Selling, Valuation

Warren Buffett Explains ‘Colorful Charlie’

After a marathon question-and-answer session with shareholders, Becky Quick asks Warren Buffett to comment on some of Charlie Munger’s best lines.

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Category: Philosophy, Short Selling, Video

Chanos: Ackman, Einhorn Help Expose Fraud

Chanos:

“I think [hedge funds] play an important part, particularly from the short side. Short-sellers and hedge funds are actually real-time financial detectives in that they are incentivized through profit to ferret out fraud, and I think that’s a very important role that people forget about from time to time.”

 

Click for video

Source: Yahoo Finance

Category: Hedge Funds, Short Selling, Video

Chanos: Do Your Own Work

Jim Chanos on Dell, Herbalife & Importance of Doing Your Own Work: Latest Interview

Jim Chanos on Shorting Herbalife, Dell

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Doing Your Own Work

Hat tip: Market Folly

Category: Short Selling, Video

Chanos on China’s Debt and PC Makers’ Failures

Famed short seller Jim Chanos, founder and president of Kynikos Associates, tells Impact Players host Robert Wolf that China is struggling under a massive debt load. Chanos also says explains why he’s shorting the entire personal computer sector. Wolf is an outside adviser to President Obama.

Chanos on China’s debt and PC makers’ failures – Impact Player

January 17, 2013

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Famed short seller Jim Chanos says the battle over Herbalife between billionaires Bill Ackman and Dan Loeb will turn on whether the company’s products are being used or simply sitting on distributors’ shelves.

Chanos handicaps Herbalife battle – Impact Players

January 17, 2013

Category: Short Selling, Video

Bad Risk Management – Not Secret Bailouts – Killed These Clients

  “If this particular broker had known exactly how far the bailouts reached, neither he nor his clients would ever have lost so much. But during the crisis it was decided, by people deemed more important than small-town investment advisers and their clients, that the full story of the bailouts didn’t need to be told.”…Read More

Category: Bailouts, Investing, Markets, Psychology, Really, really bad calls, Short Selling

The Wisdom Of A Short Seller

Category: Short Selling, Video

Market Declines: What Is Accomplished by Short-Sell Ban?

Category: Short Selling, Think Tank

Short-Selling Bans Do Not Work!

Bloomberg.com – ECB Said to Await German ESM Ruling Before Settling Plan European Central Bank President Mario Draghi may wait until Germany’s Constitutional Court rules on the legality of Europe’s permanent bailout fund before unveiling full details of his plan to buy government bonds, two central bank officials said. With the court set to rule…Read More

Category: Short Selling, Think Tank