With regard to the operation tendency of investment, Lao Ba once said that there is no short selling and no leverage. I believe many people have understood its harshness and said something bad about leverage. Almost every rookie has been seduced by this damned woman once, so its power is dominant, belonging to sharp knife and fire cooking, while shorting itself has a huge invisible whirlpool, and its lethality is even more painful. Belong to blunt knife, small fire slow stew, this article we systematically talk about why not easily short.

First of all, from the nature, take a look at the difference between short and long, although it is only a word difference, the direction is different, but the elasticity of the game and the elastic probability of return are very different.

Your buddy Xiao Li wants to open a fruit store and borrow money from you. Then you decide to invest 100000 yuan in his stock. At this time, you know better than anyone that the end result will be 100000 yuan worth of water. This is a big deal.

And your other good friend, Xiao Wang, entered a batch of Apple Inc with a price of 10 yuan per catty. You thought he was out of his mind, and you thought that in a few months, the price would certainly come down, so you discussed with Xiao Wang. Can you lend Apple Inc to you, pay him back in a few months, and pay him interest in the vacant time, so Xiao Wang agreed.

After you borrowed Apple Inc, you quickly sold it and got 100000 silver, but it was really bad weather, just in time for the poor harvest of Apple Inc, and the price of Apple Inc skyrocketed to 100 per catty. Once you did the math, excluding interest, you had to spend 1 million to pay back Apple Inc. I lost eight times in my life.

See, the same 100000 yuan fruit business, to do more is to lose 100000, while shorting, you have to lose more than 900,000, or even headless, this is the loss end.

Let's talk about profits. Xiao Li's fruit store you invested in is doing well. You have made six or seven hundred thousand yuan in a few years, and you have made five or six times that.

And you do Xiao Wang this order, have to admire your vision is really accurate, Apple Inc price really fell, finally fell to 5 yuan, you earned 50%.

See, this is the flexibility of short profit, the room for long is unlimited, and the limit of short selling is 99.99%. For the degree of elasticity of profit, long undoubtedly occupies a great natural advantage. I call it the genetic difference of profit elasticity.

Therefore, we should be very clear that the elastic genes of short selling and long selling in terms of profit and loss can be summarized into two points:

1. Profit: unlimited space for long, 99% more for short.

two。 Loss risk: do more than 100% (except for specific rules), short losses are unlimited, the risk is infinite.

Let's listen to why Baxter opposes shorting. Bab said so. He said that Charlie and he had the idea of shorting hundreds of stocks in the past, but if they did, they might have become destitute. Because the evolution of the bubble is based on human nature, no one knows when it will burst, or how big it will expand before it bursts. To put it bluntly, junk stocks will also be hyped under fanatical humanity. Short is not short, because the risk of short is infinite, which is the crystallization of the wise man about short selling.

Some friends may say, can I make up for it with certainty? But in fact, there is so much rugged between the certainty of shorting and its final landing that many of the variables are breaking it, and we'll talk about it next.

Shorting can be succinctly summarized into the following two types, let's talk about them separately:

1. Overestimate of value

two。 The company faked it.

First, the value is overvalued, for example, a company you think its intrinsic value is 10 billion, but eventually it rises to 100 billion, then you want to go short, because your reason is very simple, the price must fluctuate around the value for a long time, so you think it will fall, so you go short.

Please note that the risk of shorting based on overvaluation is extremely great, risking a hail of bullets to earn less than twice as much. Why?

1. You can't be sure how long it will be overestimated.The time is too difficult to grasp, some companies overestimate and overestimate, there is a great benefit midway, but also overestimate for many years, it can overestimate 5 times, why can't it overestimate 10 times and 20 times?

Lao Ba also said about this, he said that we will see the price of many stocks far exceed their intrinsic value, the stock price is 5-10 times the intrinsic value is very common, but rarely see the stock price is 10-20% intrinsic value. So, you may think it's easy to go short, but it's not. Cymbal

Lao Ba also said that the reason why stocks are often overvalued is because there is a driving force behind it. They can often use overvalued stock prices to increase their value. For example, if the intrinsic value of the stock is $10, but the trading price is $100, they may raise the intrinsic value to $50, and then Wall Street will say, "look, we created value!" "the game will go on, and you may have run out of money as a short seller before the end of the game.

two。 The market will not give you opportunities, especially for growing companies, whose overvaluation is long-term.This is a very normal thing in the stock market. For some companies, it is concussion to digest the growth of the company. For example, some companies are 60 times earnings, it does not come down, it, etc., two years later, naturally this valuation matches, so, even if overvalued, the market may not give you short opportunities, this is also an extremely realistic problem.

3. A lot of times it's hard for you to make it to that moment.

Because there is a price, there is interest, to say a minor result, high concussion for a year or two, this interest will be enough for you to drink two taels.

A lot of times, the market gives you a stimulus, aren't you overvalued and short? well, I'll double your overestimate and keep going up, not to mention making a profit. Even if you do long, it's enough for you to go short. When it goes up, it's hard for you to ride a tiger and lose money. You still have to wait for the stock price to fall. This psychological quality is not something that ordinary people can have.

Especially when you encounter Daniel, the bubble will fly hundreds of times, and all the short sellers will burst for you, and after all the short sellers in the market go bankrupt and hand over the gun.

For example, Quantong Education was known to be in a big bubble before, but it just doubled and doubled, and finally it went up tenfold. No matter how many bears you took turns, why? because bulls can sell short positions through manipulation, while short sellers are very difficult to manipulate. It can only arouse public opinion or directly convict. It is really a good universal education. Educators are different. Sure enough, all the people in the market were educated, and the name was very arrogant.

4. No, the risk and return don't match your ability.

As long as you have a thorough understanding of valuation and know that it is undervalued and overvalued, why do you have to play such a game with unequal risks and returns? Why not ask the company to do more? The space is infinite, there is no interest, there is no pressure, why are you doing this? Together, you can only see the overestimation, not the underestimation?

5. The cost of shorts is too high and the operation is difficult.

As we all know, it is very simple to let a stock rise. If you have tens of billions of dollars, you can buy and buy and forcibly drive up the stock price, but shorting is different. You have to have a lot of chips in your hand to sell out, so you can quickly suppress the stock price. But be clear. What to do when you sell out? the most important thing is that you can't decide to let others sell chips at all. That is to say, if you want to boost the stock price, you can buy it directly with money. Like the recent public offering funds and passive funds, they continue to buy and increase their positions, driving up the stock price, but it is difficult for you to make the stock price fall. If you do not have enough chips, you still expect others to sell.

Therefore, the manipulation of short positions is more like a sudden destruction of orders in a certain moment, which is typical of the practice of all countries in the 3.27 treasury bond futures incident, shorting more than 200 billion treasury bonds in 8 minutes, directly smashing it into a waterfall, but it will be difficult if you ask him to do it again.

6. Shorting is more professional and difficult than doing more.

The reason why I talked about the above point is to let us know that it is more difficult to be short than to be long. If you are long, a theme can be hyped and let the stock price soar, but shorts are not so easy. Let most people sell one after another every day, and not so many people still buy.

You are like a bear in the "big short", in order to use CDS as a tool to short American real estate. After reading thousands of pages of extremely complex and professional product instructions, how many ordinary investors can do it?

The shorting institution itself is also very professional. There are generally three steps: collecting evidence, shorting and issuing a short report, and initiating a class action.

For example, to collect evidence, when Muddy Waters was shorting Oriental Paper, it sent people to stand at the gate of Oriental Paper's factory to count the number of trucks entering and leaving the factory. In the end, Oriental Paper is expected to falsely increase its income by 27 times.

When doing empty Huishan Dairy, in order to investigate the situation of the pasture. Using data from drones and satellites.

In addition to field research, Muddy Waters also needs access to a large number of public materials and data, such as government reports, affiliated companies, spending money to find various experts, and hiring third-party agencies to do due diligence. At the same time, we also need to find loopholes in the company's financial reports and various business activities.

For example, when shorting Oriental Paper, it questioned that it spent tens of millions to buy a company with a book value of only a few hundred thousand, while shorting focus Media questioned that it bought a bunch of companies at a high price and sold them at a low price.

Even so, there is still a large error rate, and Xiao San has nothing, and it is not arbitrary to short only one doubt.

7. It is also worth thinking about one point, that is, the big ship of Guoyun is moving forward.So many temporarily overvalued companies may experience some overvaluation, will usher in growth.

As a result, some overestimates are only phased, maybe the decline we wait for may be a phased pullback, or we may not be able to wait for a real slump, and hype is commonplace and brainless to give you a rise. in short, it is more difficult for me to judge the bankruptcy of a company than to judge that a company is going well.

As for corporate fraud, there is such a mode of operation in the market, that is, some people will short the company by thinking that the company is fraudulent, mainly in US stocks, such as the short selling report issued by so-and-so Muddy Waters, which may be in line with the ideas of many investors. it opened the way to short selling, but in fact, the risk is very great, why, there are mainly the following points:

1. A conclusive demonstration of corporate fraud.

This in itself is an extremely difficult thing, and it needs to be demonstrated from all aspects, even some offline evidence, and so on. Therefore, in order to truly convict a company, it takes more energy and evidence than the energy and conditions we need to buy, just like, you can say that a person is a good person, but if you say he is a thief, that is not the same thing. Even if you think he is a thief again, this conclusion cannot be easily reached if there is not enough evidence.

two。 It's hard to convict.

Even if the company is faking in it, if there is not enough evidence to take it down at once, drop your wallet and go to the police-wait, the company may not be able to survive in 10 years, but what can it do?

Therefore, the most realistic and crucial problem lies here, that is, it is difficult to convict, it is easier to suspect than to convict, but in fact, this is the case with many companies. You know very well that it is a fraud, but you can't be convicted. As a result, other people's stock prices are still as strong as iron, and even record highs rise again and again, which still abolishes you, who holds the bottom card.

3. I can't stand it.

As I said above, after shorting, many short sellers need to be baptized violently by bulls, or even by stock price manipulations. you think counterfeiting has been bought on your side, and you have been waiting there for a year and a half. You should know that the fraudulent company has a very beautiful financial report, and the rest of the loose can not stand the hood. it is normal for you to do a few rounds of new highs, so you have to get down on your knees and surrender your gun directly if you can't make it to the end. Even if you see it right in the end, what can you do?

For example, who to learn from, in more than 30, there is a short report, now some people still doubt it, but now the stock price has risen to more than 100, your short has exploded a long time ago.

Some people here may say that it depends on logic, not on the theory of right or wrong. The problem is that logic does exist from beginning to end, but you can't make it to the end, which shows that it is very difficult for us to implement logic. This is the most realistic problem. It's like there's nothing wrong with leveraged banks logically, but few people survive.

Some people here may use companies such as Kangmei and Ruixing to say things, but they should also be aware of the element of luck. This is only after the SFC has forcibly intervened in the investigation and there are auditors and other recognition and cooperation. They were forced to admit that they could not contain the fire, and if not, even if they continued to procrastinate, it would still be it for a few years.

You know, among the hundreds of companies involved in the investigation, there is only a single digit, which is a small probability. Therefore, we should be very clear here that counterfeiting and implementing counterfeiting are two different things, and there is no logic to speak of. In many cases, you just can't find out how long this process will last, and this is usually the biggest risk factor.

Especially for those who have a relatively large amount of capital, or those who invest all their wealth, do not go short. Lao Ba has also said that he will never go short, because they have too much money, and any bubble will make them lose a few wealth. This pressure is simply too great.

For us ordinary people, you enter the market with your wealth and go short. If you have a total of 1 million, the result may be a loss of 8 million, which is even worse than your bankruptcy. If you are bankrupt, you can start all over again, and you have to go back from the eighteenth floor of hell.

On the other hand, what short sellers want most is that others go bankrupt, which is like a zero-sum game. if others go bankrupt, you get rich, and if others get rich, and you go bankrupt, in short, either you want his life, or it kills you. You make money by killing others, and this money is not destined to be easy, and Bart also said that he is not willing to make a profit in this painful experience. At the beginning, he knew that there was a good opportunity to invest in tobacco, but it was not the same. This kind of zero-sum game investment is undoubtedly painful.

On the other hand, positive investment is a win-win situation for both the enterprise and us. This feeling is the most harmonious. I enjoy the feeling of partnering to eat meat very much.

Not only Bab, Graham also had an experience of shorting in 1954. He had no mistakes for more than a decade, and his wealth evaporated so quickly that he lost twice the cost for every 20% rise in the later period.

With regard to shorting, the above needs to be clear. Recently, under the influence of many Chinese stocks, many people may be tempted to go short. Finally, I repeat that the reason why people are easy to be brainwashed is that the logic at the bottom is not solid enough in essence, that's all.