What's the best way to bet against the market?

Fuzzy_Logic
Fuzzy_Logic

What's the best way to bet against the market?

Other urls found in this thread:

youtu.be/zNVgDHCqSVA
en.wikipedia.org/wiki/Exchange-traded_fund#Leveraged_ETFs
mega.nz/#F!DpAz2IgQ!nW7bPNnpJFk5CAV3ypiaHw
youtube.com/watch?v=dQw4w9WgXcQ

New_Cliche
New_Cliche

You have to define a few things first.

-How much money are you working with?
-How much are you willing to lose?
-What market? The S&P 500? All equities? July corn futures?
-Do you expect the market to crash today? Next month? This decade?
-How badly do you expect it to crash?

Because for shits and giggles you could pay like $50 in commissions and another $1000 to get 20,000 SPX puts at 1900 for the 22nd.

Then if the S&P 500 drops 500 points in two days, from 2,378 to 1,878, your 20,000 puts are suddenly worth a total of about $440,000.

In which case, I hope you did that trade in a tax advantaged account.

happy_sad
happy_sad

then if the S&P drops 500 points in two days

And when was the last time the S&P dropped 5% in 48 hours? The market has chopped sideways in a boring manner for so fucking long that their would be riots in the streets if an index dropped anything more than 250 basis points in a single trading session.

TreeEater
TreeEater

21% drop lol

Point is, if OP thinks there's going to be a Black Monday tomorrow (plus change), he could do that. Just giving a stupid answer to a stupid question.

RumChicken
RumChicken

How much money are you working with?

I could probably gamble $1500 and not miss it.

How much are you willing to lose?

All of it.

What market? The S&P 500? All equities? July corn futures?

Just the stock market in general. I guess the Dow Jones Industrial Average or the S&P 500 like you said.

Do you expect the market to crash today? Next month? This decade?

I don't really know. Sometime in the next 5 years. Could be tomorrow could be a while.

How badly do you expect it to crash?

Badly.

Because for shits and giggles you could pay like $50 in commissions and another $1000 to get 20,000 SPX puts at 1900 for the 22nd.

Then if the S&P 500 drops 500 points in two days, from 2,378 to 1,878, your 20,000 puts are suddenly worth a total of about $440,000.

Thanks for the answer. I learned something. I didn't even really know precisely what calls and puts were. I watched this youtu.be/zNVgDHCqSVA and then did the math to see how you got your answer (20000 * 1900) - (20000 * 1878) = 440000.

In which case, I hope you did that trade in a tax advantaged account.

What's that and how do you get one?

VisualMaster
VisualMaster

write naked puts

TechHater
TechHater

Wikipedia says that it's retarded to buy and hold leveraged 3x inverse ETFs:

The re-indexing problem of leveraged ETFs stems from the arithmetic effect of volatility of the underlying index.[51] Take, for example, an index that begins at 100 and a 2X fund based on that index that also starts at 100. In a first trading period (for example, a day), the index rises 10% to 110. The 2X fund will then rise 20% to 120. The index then drops back to 100 (a drop of 9.09%), so that it is now even. The drop in the 2X fund will be 18.18% (2*9.09). But 18.18% of 120 is 21.82. This puts the value of the 2X fund at 98.18. Even though the index is unchanged after two trading periods, an investor in the 2X fund would have lost 1.82%. This decline in value can be even greater for inverse funds (leveraged funds with negative multipliers such as -1, -2, or -3). It always occurs when the change in value of the underlying index changes direction. And the decay in value increases with volatility of the underlying index.

en.wikipedia.org/wiki/Exchange-traded_fund#Leveraged_ETFs

I was thinking about just buying something like FAZ anyway though and just hoping the market crashes before the whole thing evaporates.

Do you think the market even can crash though?

I've heard people say it can't because of the "Plunge Protection Team" and the "Exchange Stabilization Fund."

Evil_kitten
Evil_kitten

why not just wait until the market starts crashing before doing that?

I get you can make TONS if you time it just right, but realistically you're not going to if you just "have a feeling the market will crash." instead, you're missing out on potential investment opportunities will draining your potential principle.

SomethingNew
SomethingNew

Personally I think stagnation is more likely than an outright crash.

The tech bubble was a mania of people bidding up stocks, realizing the underlying was garbage, and running for the exits.

The housing bubble was similar, and it would've been contained if the garbage loans hadn't infiltrated the entire financial system as AAA bonds. Again, a dramatic crash as everyone realized that.

Fun as it might be to use the words "bubble" and "crash", to have a real drop you need that selloff mechanism, that new information, that shattered illusion.

Student loans grow exponentially, but the "selloff" wouldn't be. Colleges and the federal balance sheet are the extent of the real damage from that "bubble".

Subprime auto loans? Everyone knows subprime = garbage and shit cars are shit cars. People aren't bidding up '05 Civics as a "must have" car.

Housing? Still too recent from the last crisis. Plus the post-2008 growth has been jumbos instead of NINJAs.

That said, you have low-but-rising interest rates, waves of retirement, and flat population numbers that all provide major headwinds to rapid growth.

TreeEater
TreeEater

Personally I think stagnation is more likely than an outright crash.

You know, you're probably right.

I just want something that can get me enormous returns. Like turning $1000 into hundreds of thousands.

I want to cheat the system and get out of having to pay rent or a mortgage forever and buy a house outright. If I lose a few thousand dollars on retarded bets then who the hell cares. Lot's of people spend that much on cigarettes or whatever.

I've been trying to make a list of things that could get insane returns. So far I think crypto, uranium stocks, or betting against the market could do the trick.

I already have a bunch of crypto, at some point I'm planning on buying junior uranium stocks, and I'm just now sort of looking at betting against the market.

Do you know of any other hair brained long shot ideas that could get enormous returns if they actually worked?

People like Jim Rickards think the dollar might fail. If that happened I could see gold mining stocks going up by hundreds of times.

RumChicken
RumChicken

if youre hearing it from someone else its probably too late

eGremlin
eGremlin

If you're not swinging around six figures, focus on earning and saving rather than returns.

Bust your ass at work, switch jobs, earn an extra $10k? That's $10k, every year. To match that, your $1k portfolio would need a 1000% return. Every year.

So for now focus on accumulating a large enough capital base. You've got two key things: time and skill.

Use them.

Garbage Can Lid
Garbage Can Lid

You could do this with stocks if you looked carefully for value stocks. My portfolio right now is comprised of stocks I expect to yield 100% ROI. You could try biotechs for moonshots since you're willing to risk some cash.

The majority of my investments are stable companies but I put $3k in a biotech for shits and giggles (and would have 60% ROI if I sold now) that has a PT 10x the amount it's trading for right now. But if it tanks I won't shed a tear.

takes2long
takes2long

I forgot to mention biotech. I'm thinking about investing in this company called Geron. They're developing this cancer drug that attacks telomers. I have no idea if it'll pan out or not but I want to roll the dice.

idontknow
idontknow

Well this is solid responsible advice and it's also pretty depressing.

It means I'll be stuck being as a wage slave who faces eviction/foreclosure if I'm out of work for any period of time. And I won't get to enjoy the freedom brought by all of all that responsible behavior until I'm too old for it to really matter.

It's good advice; just explaining why I'd rather focus on ridiculous long shots for a year or two.

hairygrape
hairygrape

I don't know much about that company but look for biotechs that have successfully completed Phase 2 trials. At that point the drugs have a decent shot (something like 60%) of approval by the FDA after Phase 3 trials.

Playboyize
Playboyize

Thanks

Carnalpleasure
Carnalpleasure

are you looking for the fastest way to lose all your money?

CouchChiller
CouchChiller

It's good advice; just explaining why I'd rather focus on ridiculous long shots for a year or two.

You can do both.

Stupidasole
Stupidasole

I would say I'm looking for high-risk/high-reward speculation opportunities, but yeah I guess phrasing it your way is probably accurate too.

True.

TalkBomber
TalkBomber

invest in shit peopel can't live without.
transit, medical, food, water

Disable AdBlock to view this page

Disable AdBlock to view this page

Confirm your age

This website may contain content of an adult nature. If you are under the age of 18, if such content offends you or if it is illegal to view such content in your community, please EXIT.

Enter Exit

About Privacy

We use cookies to personalize content and ads, to provide social media features and to analyze our traffic. We also share information about your use of our site with our advertising and analytics partners.

Accept Exit