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Views On Shorting Property Stocks

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Guest Daddy Bear

As the last thread has got a bit wearisome I have opened a new one to discuss

shorting property stocks?

Is this a good investment?

Are many people considering this investment?

How risky is it?

What shares are people shorting?

What web sites provide good tips?

How does one time a downturn?

How does one minimise risk?

Is a conventional broker better then spreadbetting?

Do spreadbetting firms screw you on the spread?

And any other views or tips welcome.

I for one got into shorting shares about 3 weeks ago after a steep learning curve.

I lost a nice bit on Persimmon - invested prior to results (thinking they'd contain bad news - they did not!) and shot up - and closed (stop lossed) out to early on a spike. I learnt a valuable if expansive lesson

I am currently short on Paragon and Countrywide and am doing OK - but will hold for long term even as losses mount and will re short on way up as well as down. Convinced that fundamentals from a 30% property market fall will be indicated in a 60-70% share price fall.

DB

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Is this a good investment?

It's speculation, not an investment.

Are many people considering this investment?

As I said, it's not an investment. But many speculators are doing it.

How risky is it?

If you need to ask, you should not be doing it.

What shares are people shorting?

All sorts of.

What web sites provide good tips?

Please don't listen to them.

How does one time a downturn?

If anybody pretends to be able to do it, he is certainly a liar.

How does one minimise risk?

If you need to ask, you should not be doing it.

Is a conventional broker better then spreadbetting?

Yes.

Do spreadbetting firms screw you on the spread?

Yes. And not just on the spread. Always remember they're essentially bookmakers.

And any other views or tips welcome.

To win at this game you must not only be right. You must be right at the right time. Which is a hell of a lot more difficult than simply being right eventually.

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Guest Daddy Bear

And any other views or tips welcome.

To win at this game you must not only be right. You must be right at the right time. Which is a hell of a lot more difficult than simply being right eventually.

Why do you have to be right at the right time? As long as you are right eventually is all that counts.

This is NOT Daytrading.

For example say you took out a 9 month sell (short) contract on CWD at 342p 2 months ago - OK still a little bit of hubris..froth...denial in the market ..it goes to 370p. On paper you have lost (at £25ppt) 28 x £25 = £600.....but hang on in there (keeping a high stop loss so you do not get spiked out of market) knowing that eventually fundamentals will kick in - as we have seen in last week and share price is back to where you started .... Eventually an estate agent shareprice in this market has to plummet... you just have to have the self belief and funds to cope with short term paper losses... and when the fall continues you have orders in place already to sell at say £10ppt intervals on the way down. Also be prepared to increase risk and leverage on the way up if you have sufficient funds.

Do not get me wrong - it is high risk but for those with a high risk appetite you can reap high rewards.

Why would it stay high??

You just have to have an attitude to risk where you can live with paper losses - if they occur - believing in your conviction that due to continuing stagnation/downturn in 9 months time share price will be lower as fundamentals will win through - even if it is not you just roll the contract over for another 3 months.

It must be clear that this is not day trading - that is what the majority of people who use spread betting sites do.This is a long term short (without tax implications) on the falling property market/sales.

Yes I agree it is speculation - but how different is it to buying gold at a low price and selling at a high price?

You sell an estate agency stock at todays price and buy it back to cover the trade within a certain time period - the longer the better.

Would you buy an estate agency, builder, construction, mortgage lender, carpet provider share at the moment?

Most people who believe that this downturn in the market will knock 30-40% of property prices would NO. So if you believe that... it figures you would sell those stocks. That is precisely what I have done and will continue to do.

There is money to be made when bubbles burst. I intend to find these opportunities. I only made money on the tech bubble on the way up. If I had known how to short the market on the way down when it was so obvious that it was going to collapse i would have done so. instead of just selling all my long stock and sitting out of the market. (as it happens I put the money in a buy to let and made a bit of money there - I sold 6 months ago) I hope to use this profit to accomodate the high risk of shorting the market. I will not miss out agian.

I reckon Countrywide will fall to 100p int the next 9-12 months. At £100ppt that £24000 tax free. Maybe it will rise by a 100p in the next 9-12 months thats 10K loss if you cash it in. But do your own research and answer the question what is more likely to happen? Have a look at the share price history of similar stocks in the late 80's - history often repeats itself.

Remember this is high risk - not for faint hearted and not for people who cannot live with loosing a certain amount - Use stop losses ( but do not allow yourselfto get spiked out) and only speculate with money you can afford to loose. Remeber as well it is highly leveraged so losses can spiral very quickly.

Any other speculative stocks out there?

Where else to speculate?

DB

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Is this a good investment?

It's speculation, not an investment.

Agree, investing is over 5 hopefully 10 years not a few months.

Are many people considering this investment?

As I said, it's not an investment. But many speculators are doing it.

Lots, that's the danger. The market is designed to screw the amateur investor and guess who's doing nothing but shorting or talking about shorting CWD. Yep the amateur investor.

How risky is it?

If you need to ask, you should not be doing it.

Extremely. Imagine CWD hitting 600p in stages each time you get stopped out you get back in higher and for more. But each time you get stopped out again.

At the bottom i'll explain how and why this could happen.

What shares are people shorting?

All sorts of.

all sort & lots of other things too like cotton or the £.

What web sites provide good tips?

Please don't listen to them.

Agree.

How does one time a downturn?

If anybody pretends to be able to do it, he is certainly a liar.

Lol, if I knew that i'd be a billionaire by now.

How does one minimise risk?

If you need to ask, you should not be doing it.

Impossible. If you want to win 5K then you must be ready to lose 5K. Remember this is gambling.

Is a conventional broker better then spreadbetting?

Yes.

If you win No, otherwise yes. Spread betting allows gearing so you multiply up your winnings but also your losses.

Do spreadbetting firms screw you on the spread?

Yes. And not just on the spread.  Always remember they're essentially bookmakers.

Of course, they are in it to make money after all.

And any other views or tips welcome.

To win at this game you must not only be right.  You must be right at the right time.  Which is a hell of a lot more difficult than simply being right eventually.

How shorting works:

Imagine shorting 10K worth of stock dated in 6 months. What happens is you lend 10K from someone who already owns the stock promising to give them the stock back in 6 months. You also pay them some money for the privilege since they are unable to sell the stock in the next 6 months even if they wanted to since you hold it.

But the first thing you do with the stock is sell it and pocket the money. Then after 6 months if the price has fallen you buy it back in the open market for a cheap price and keep the spare cash. e.g. short at 400p, sell for 10K, mths later buy back at 200p costing 5K so you made 5K minus a payment at the start (the spread covers this).

How stops work is similar. In the example above if you put a stop at 500p when the price hits 500p you immediately buy the stock on the open market. So buying back would cost you  12.5K so you lose 2.5K and the payment at the start.

The above has two very important points to remember: who you lend the stock from and how stops work.

How you can get squeezed out and why:

Well number one do you really believe that Barclay's bank will be lending you there stock so you can short it if they expected it to drop in value?

The people who lend you the stock (the big boys like pension funds and banks) will end up losing money if your correct. So they will do there best to prevent it.

Imagine lots of amateur investors on one side and a bunch of multi billion dollar corporations on the other, who do you put your money on?

Number two, everytime someone gets shorted out they have to buy the stock and guess who they end up buying it from? The big boys of course often the very organisation that lent you some stock in the first place. Also all this buying of stock as people get stopped out makes the price jump higher, causing more people to be shorted out and so pushing up the price still further. a price spike that is a shorter squeeze.

Remember the price of a share goes up only when people buy it and goes down only when it is being sold. Fundemental like profits and loss don't do this. Normally if a company missed it's earning's then people sell so the price falls but if nobody sold it wouldn't drop.

So the big boys will deliberately go out and buy stock in a piss poor company like CWD just to perform a shorter squeeze and make a little extra cash. And best of all for them they know they plan to hold for the next 50 years so don't care if the price goes up or down as long as they get a dividend, it keeps growing and they make a bit of cash from amateur investors shorting a so called sure thing.

Just think about how it works and what manipulation is legally possible.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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