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I would like to take the words from that beautiful song by Peter Sarstedt in 1969. Yes, I constantly date myself but I’ll leave the lyrics for another column!
But I ask, in this major slide in the market: Where have you been? You have not been shorting – not even a little. I am not talking about the average investor I am talking about HUBB clients, Safety in the Market disciples, and Trading Tutors Newsletter readers. We have had one of the best opportunities to make money on the downside yet few have taken advantage of it. I will be very interested to see the performance of ‘Short’ Fund Managers and suspect that their performance will be ordinary. ‘SharesBulletin’ has followed a ‘shorting’ strategy over the last few weeks and has done extremely well with profits up by about 15% in a blink!
We, of course, know that there has been shorting of some high profile stocks like ABC, ALS, BNB and many others. Some larger players smelt blood and went in for the kill.
One of the downsides to not understanding and using shorting is that if you stay in your long positions when the market starts to slide you are not ‘insuring’ or protecting your gains – unless you are using ‘put’ options strategies.
When a market slides we don’t know how long this will last and more to the point how low it will go.
‘Shorting’ is not a natural psyche. Traditionally, we have been used to buying and adding to positions as markets’ bias is up. Even after major bubble bursts – e.g., 1987 they still head higher. Well, they have in the past.
There are all sorts of reasons why investors stand aside in falling markets but I would urge you to at least consider CFDs as an option and test your skill in a small way just as you did when you maybe first bought shares. Apply your plan with clear risk management and you might just surprise yourself and experience that sense of achievement of making money in a falling market.
Enjoy the ride
Tom Scollon
Chief Analyst
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