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Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

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Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#81

Post by roadside_picnic »

lvl155 wrote: post #28

Just because something is expensive doesn’t mean you should short it via puts as Burry had done. Both Palantir and Nvidia have high IVs. You’re paying for that. You’re much better off looking for cheaper puts on securities with enough correlation. Since Volmageddon and pandemic craze, deep OTM options have been scalped to death. Rarely good value. Nvidia also didn’t report earnings yet which means you’re paying for t…

> high IVs. You’re paying for that.

Glad to see someone say it. A lot of people have a hypothesis about the market, but fail to do the follow through to see if the market has already priced that in. The real aim should be to see when your model (mental or mathematical) prices things differently than the market.

In this case, it's actually quite reasonable to believe that the market has over priced the risk no matter how "sure" anyone is that these companies are over valued. It's entirely reasonable to pay for an option that you think reflects an unlikely scenario, but you also believe is mispriced notably by the market.

Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#82

Post by [deleted] »

datavirtue wrote: post #72
lordnacho wrote: post #9

I'm not sure the bet is as big as it seems from the headline. When you buy options, you pay a fixed premium to get the right to buy/sell a very large value of shares, called the notional. But the notional is not what you are losing if it goes wrong, you lose the premium. The premium can be quite a small number compared to the notional.

They are only selling puts...that's a half-hearted short. They have the resources to borrow shares and bag the whole amount without a time constraint...why not do that?

[deleted]

Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#83

Post by embedding-shape »

roughly wrote: post #74
_f9cu wrote: post #59

Earlier quoted context omitted.

thank you for being nice

To expand on the original reply to you - shorting companies, or engaging in almost any stock-based activity beyond “buy and hold,” typically entails much, much higher risk than just buying and selling stock. The most you can lose when buying a share is the purchase price, and that’s fairly unlikely, but when you start getting into even options/etc, you’re magnifying your risk - small swings in the market can lead to…

> you don’t understand the risk profile well enough to do it “safely.”

Since when is this a problem? For gods sake, let people fuck up and harm themselves if they're stupid enough to take the risks, or not.

I think it's fine to say "Remember, this is risky because of A, B and C, but here's how to do it anyways..." but straight up "If you have to ask, you shouldn't" seems so backwards and almost mean, especially when we talk about money which is mostly "easy come, easy go". Let the fool be parted with their money if that's what they want :)

Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#85

Post by 0cf8612b2e1e »

legitster wrote: post #41
ambicapter wrote: post #8

Earlier quoted context omitted.

What makes it an (almost) certainty?

It being a certainty is wrong, but there is a huge differential between the growth of total market value and the lackluster fundamentals, GDP growth, and jobs numbers. To put another way, there's a lot of "potential energy" being built up in the markets right now. That doesn't necessarily mean they'll pop like a bubble - but there's really no precedent for them to continue rising.

That pre-tariff stockpiles have been depleted is going to make some hidden pain more visible.

Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#86

Post by themafia »

fragmede wrote: post #19
ambicapter wrote: post #8

Earlier quoted context omitted.

What makes it an (almost) certainty?

Reminder that economist have predicted 9 of the past 7 recessions. General handwavy statements like "there's a bubble" aren't worth paying attention to. Ones with specific timelines attached to it (like the one above, or the article we're commenting on), are worth listening to a bit more, but unless they have the funds to back it up (like Michael Burry has put down here), it's still hot air.

> Reminder that economist have predicted 9 of the past 7 recessions.

Is there someone with a better record then?

Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#87

Post by blitzar »

sfblah wrote: post #33

The problem with these kinds of bets is the Fed Put. That's the invisible force levitating stocks. I don't really see that changing unless/until the country genuinely enters a debt or currency crisis. The path is unsustainable, but they'll keep it going as long as they possibly can.

The fed signaled they are not cutting much further - almost a green light for these kinds of bets.

Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#89

Post by [deleted] »

jkelleyrtp wrote: post #38
fragmede wrote: post #19

Earlier quoted context omitted.

Reminder that economist have predicted 9 of the past 7 recessions. General handwavy statements like "there's a bubble" aren't worth paying attention to. Ones with specific timelines attached to it (like the one above, or the article we're commenting on), are worth listening to a bit more, but unless they have the funds to back it up (like Michael Burry has put down here), it's still hot air.

It seems like the economy is on a “K” shaped flywheel. How much worse can the economy get for the regular worker before the systems just pops? We’ve put so much speculation into an AI/tech salvation that seems premature, especially when you look at ROI vs depreciation timelines. I’m not sure what timeline to place on that but there has to be a floor for how bad it can get for the regular man. Shit is just expensive.…

[deleted]

Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#90

Post by hencq »

blitzar wrote: post #29
strictnein wrote: post #15

Earlier quoted context omitted.

Not usually a good idea if you're not a skilled investor, but here's a place to start: https://www.investopedia.com/ask/answers/06/sellingoptions.a...

Selling (writing) options is NOT how you bet against a company. You either sell the stock short or buy puts.

How is selling call options not betting against a company?
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