281–290 of 410 posts
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> It should be noted that Melvin Capital returned over 50% in 2020[1], 44% in 2019[2], and has averaged above 30% annual returns since inception[3]. And those returns are all net of fees.
I'm curious; do you know that from some document from the fund? The linked source doesn't appear to support that conclusion.
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The problem with puts is they can expire before this calms down. If you can get a short in and not get a margin call this is the opportunity of a lifetime. Only the biggest players dare risk it though.
There are long-dated puts that expire 1-3 years from now. In what world would this not calm down before then?
It should be noted that Melvin Capital returned over 50% in 2020[1], 44% in 2019[2], and has averaged above 30% annual returns since inception[3]. In other words, even though this is definitely painful, even inclusive of this event, it's one of the best performing hedge funds of the past decade. [1] https://www.wsj.com/articles/citadel-point72-to-invest-2-75-... [2] https://www.bloomberg.com/news/articles/2019-07-19/…
if I gained 50%, 44%, followed by a 53% loss with a 2% fee, I'd be under water for the last 3 years, but the sp500 would have yielded me a 37% gain - virtually no fees. I'd rather the sp500 over these guys
Yes, the gains are real, but not for the reasons that you think.
The true driver behind that 37% gain is the Fed. They’ve been juicing the market for the past 12 years!
The fundamentals, ie Warren Buffet style investing, has not improved. And the moment that the Fed stops with its market manipulation, is when the S&P will fall.
The play is that, when the government gives you free money, then go long. And ride it until the wheels fall off.
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...except that unlike slot machines, the probability of you winning does increase the second time around. It costs more money (in aggregate) to pump from $20 to $200, than from $200 to $2000. I'd also imagine that the buy side will gradually lose steam once meme fatigue starts to set in.
TSLA's valuation can only be described as extremely optimistic, hedging on "huge bubble" status. I don't think we've seen the brakes on the buy side at all, considering the buy side has been artificially constrained by limits and restrictions. Is $2,000 GME possible? Of course it is. It's not even unprecedented considering the other businesses valued at billions of dollars with shaky business models.
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They latched onto Citron first. They're focusing on punishing the "enemy" instead of an abstract trade idea. Motivates holding longer instead of jumping ship to cash out. At this point though, many original buyers have probably sold some/all and most current holders are in it to make a quick buck, not to stick it to the suits. They'll be happy to jump off with a 2x or 3x return if they think the house of cards is abo…
> They're focusing on punishing the "enemy" instead of an abstract trade idea. Afaik that's only a somewhat recent change in narrative. One doesn't get that many people, and that much money, on-board solely on the idea of "Burn your money to punish an enemy that has much more money than you", you get them on-board by promising massive gains and how getting in on this will yield such great returns that people can buy…
It should be noted that Melvin Capital returned over 50% in 2020[1], 44% in 2019[2], and has averaged above 30% annual returns since inception[3]. In other words, even though this is definitely painful, even inclusive of this event, it's one of the best performing hedge funds of the past decade. [1] https://www.wsj.com/articles/citadel-point72-to-invest-2-75-... [2] https://www.bloomberg.com/news/articles/2019-07-19/…
Warren Buffet and Charlie Munger on shorting: https://youtu.be/GVtaKKn43M8 “It’s ruined a lot of people “ “It’s the sort of thing you can go broke doing”
Instead of learning about short selling from famous long-only investors who don't specialise in short selling and have no particular skills in the area, another idea is to learn about short selling from people who have done it successfully & have built a long career around it. E.g. consider Jim Chanos & Kynikos Associates. Chanos founded Kynikos in 1985. Kynikos has a short-only fund, a long-short fund and a 190% lon…
Andrew Left is good too.
Chanos was shorting Tesla for several years. Not sure if closed that position.
Potentially Unlimited losses.
What happens to a 100 million short at $200 that goes to $2000
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quite a bit has changed since 2006, specifically in the financial reform bill of 2010 and the jobs act of 2012 not a lot, but a bit circulating a clip from 2006 as your only insight into the hedge fund world just proves all the talking heads right about retail traders being a joke.
> quite a bit has changed since 2006, specifically in the financial reform bill of 2010 and the jobs act of 2012 > not a lot, but a bit I don't know who you could persuade with such lack of conviction...
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I agree; its important to keep in mind that GME's total market cap, even after all of this, is only ~$22B. A 140% short position is bad (even if that's the real number, which I doubt), but in the scope of all things, not world-ending. Some hedge funds will die from this, and we'll probably have a few weeks of overall market downturn similar to last year, but we're not talking about "the entire US real estate market"…
Indeed, I'm saying it's not the cost of if they do a bailout, it's the cost if they don't. Maybe I've overestimated the impact of a ~13bn fund evaporating and breaking a clearing house and the liquidity crunch from all their leverage and the linked derivatives. Not sure what hedge fund leverage is these days. Surely it can't be at 2008 levels. We know about Melvin, not sure about others in there. As I interpret it, i…