Why Shorts are Hard To Find and How You Can Find Great Shorts - Jason McDonald

successful short sir so believe it or not has done some other things but what everyone remembers him for is breaking the pound as they say when the the pound was forced out of what was called the erm back in 1992 so there is sort of a little bit of a mystique about shorting but at the end of the day it's not really a mysterious process but we do need to get to grips with it because we need to be able to optimize our returns and we need to do some other things so here are three of the main things we use shorting for hedging we use shorting to decrease the volatility of our returns what do we mean by that well of course even though we are living in a mainly expanding GDP environment which causes the stock market to go up on the back of increasing earnings clearly even these days the stock market doesn't go up in a straight line although you know things don't go up in a straight line and when they do come back obviously we want to be able to generate some positive returns in a falling market environment as well and thirdly actually we don't really want to just be putting on decent hedges or mitigating our risk ideally we actually want to be generating absolute profits from our shorts as well so I stick through this pretty quickly because Anton's are obviously already been talking about IRAs in the IRAs you know better than I do you're not allowed to short so we had this example earlier on if you've got a $50,000 long equity portfolio in your IRA and we're back in 2007 2008 remember that where markets used to fall and it felt fairly precipitously and that's the other thing about falling markets they tend to fall much quicker than they actually go up so very quickly if you'd had $50,000 exposure then you could have been sitting on a loss of 50 percent obviously $25,000 which means from that point you need the market to rally 100% just to get back to where you were so as we've been saying our solution here is that you need to take control you need to have a retail brokerage account running next door to your conventional traditional pension provisions obviously which is the RA the 401k and initially what we're talking about here is at leat at the very least having the ability to short indices sector ETFs so that you can hedge your general market your general industry or sector risk but also as I mentioned with the the third aim of shorting we want to generate some absolute returns where we actually make money out of falling stocks so if you think about last year for example the sp500 overall actually didn't do anything however there was a massive dispersion between the best performing stocks and stocks that got absolutely murdered and we can all think of some pretty obvious examples of what was going wrong in certain industries and sectors last year at the beginning of this year so we need an active approach we need a retail brokerage account next to our IRA so not really sure as I said there is this kind of mystique attached to being good at shorting you know maybe people who like to short-arc marginally miserable people and maybe that plays against your very positive American culture of being optimistic but sort of that joking aside the reason that the fundamental reason why it's difficult to find shorts is because as we've been explaining we tend to live in an expanding growing GDP environment which means that companies are increasing their earnings therefore they also have the ability out of those earnings to also pay dividends their dividends in this particular environment and dividend yields are actually very important because of course with all the financial engineering that's been taking place around the world on the back of central bank behavior there is basically a global hunt on for yield so if you look at some of the best performing stocks you know some of the old relationships that we used to think about trade-offs say for example between cyclical stocks and defensive stocks actually what you might class as defensive stocks have been amongst the highest performers because of their dividend yields so this is something that we need to be aware of as well when we when we're thinking of shorting and you know at the end of the day it's a it's a bit of a truism but for everybody there's a soul right so the market needs to have sellers we need to have shorting now there's nothing mysterious about it short sellers have got the same aims as long only people they want to buy low sell high the only difference is they sell first and they write back later that's it we go we use the same fundamental approach as we do we're methodical we have our top down and our bottom up view and we populate the our top-down macro at sector industry views with good individual stock ideas on the short side to represent what it's just the flip side of going long right so ok whose shorts in the market well we've got market makers and block traders that need to generate institutional business so they might sell short to their institutional clients on a short-term basis in order to provide liquidity we mentioned earlier on arbitrage years so does anybody heard of an ATR yeah it's a u.s. security which represents a foreign stop right so the primary listing of that stock is actually not the US is not going to be a US exchange but this is a way that you can trade the securities of a foreign country on a US exchange okay so there are some very minut differentials in the pricing once you've factored in the foreign exchange element you do there are sometimes very small very short-term differences and one way that you might play that is by going longer the local stock short the ADR or vice-versa and you can create an arbitrage situation so that's another example of where people might go short clearly we're talking about generating absolute returns institutions and individuals who actually want to speculate on a stock price falling and long short portfolio managers so we've mentioned hedge funds earlier on clearly the the big difference between hedge funds especially on the equity side and long only traditional pension funds is that a lot of hedge funds in fact most hedge funds are long short so they're not just running on one in one direction they are hence the name they're passed they're not hedging out all of their risks but they're basically isolating the risks that they want to take and they might actually have a market neutral approach to they might be agnostic on the sector but within the sector the industry that that is where they want to isolate their risk hence they're going short as well as being long one example might be which has been a real feature of the last couple of years is you might have a neutral or let's say maybe a broadly positive viewpoint on the US consumer and the retail sector however you might have a very different view on which retailers which types of retailers are going to be benefiting from the environments the conclusions that you've come to about that environment you might for example be much more bullish on online retailers like Amazon and and not-so-positive and in fact downright bearish on traditional kind of bricks and mortar retailers like Macy's is really obvious example Kohl's Nordstrom etc etc this weird thing with with shorting as well is that sometimes you know people who Shaw are kind of accused of being unpatriotic or in some way you know sort of more devilish it's just complete so one of the ways that the for example in Europe the authority is the stock market authorities plus actually the politicians back in 2008 early 2009 they actually were banning shorting of certain shares obviously particularly in the in the finance sector so they were trying to stop people from attacking in inverted commas the share prices of banks it didn't actually stop the prices going down because there are still a lot of other people out there who needed to sell stock that weren't shorting it but there is this kind of sort of attitude that's in somehow by shorting we're sort of sinners it's just absolute as I said you know everybody needs everybody needs a sell and if you happen to take the viewpoint that a situation has become extended or actually maybe you know some kind of irrational exuberance has taken place for example you know we were talking about the the tech bubble earlier earlier on then shorting is a perfectly justifiable in in fact a sensible approach to take so the other the other kind of criticism that I've heard is that the thing with Long's is that well you know you know that a long can only go down to zero home with a short a short can go to infinity theoretically absolutely the case however I don't think any of us guys here have actually ever seen a share price go to infinity we have however seen quite a few go to zero so we're going to revisit an example from earlier on as well so we're talking about a portfolio with maybe fifty thousand dollars deposited in the margin account we're taking a long short approach so we've got five Long's five shorts we've levered the fifty thousand dollars of capital three times to have a gross portfolio of 150,000 rather sensibly we've decided that we're going to have concentration limits on the size of positions so we're going to be exposed maximum 10% of that 150,000 portfolio in one stock up to 15,000 okay unfortunately one of our shorts of $15,000 receives a takeover offer at a hundred percent premium I mean anybody watching the market yesterday they won see Twitter okay it's not it they haven't announced anything yet there's no deal on the table stock 22% on the open and stayed there and there's not even a deal there so we'll see how that one develops but if you're on the wrong end as a short of a takeover deal and it's not unusual to see a hundred percent takeover premium clearly you've just booked a fifteen thousand dollar loss and if you're if you only got fifty thousand dollars in your account fifteen thousand dollars obviously as a percentage of your 50 thousand is a rather large chunk and if you're aiming to make fifteen percent returns as we were referring to earlier on per annum then it's going to take you quite a long time to make back that loss so one of the things that we'll talk about later on is trying to avoid that kind of tail risk what we're talking about there is you know that these sort of the tails of a normal distribution where you don't want to be on the other end of the kind of lottery win which is the flip side would be if you along the stock that just received a takeover bid at a hundred percent premium to the market price you don't want to be on the other side of that so we'll talk a bit about how to avoid that but you know very very basically what we're talking about here is trying to identify businesses and companies which have a flaw in their business model their business plan possibly there's some kind of technological obsolescence so I'll mention some examples later on about that sort of thing or just a situation where you know we know from having consulted lots of research that you receive a negative earning surprised that the effects of a negative earning surprise is actually of a much greater magnitude than the effect of a positive earning surprise so that's one thing that you need to bear in mind the other thing that you might as well is when you look at a company it's almost absolutely unheard of that they only have one profits warning so if they have one really bad quarter or one really about six months it's very difficult to turn that situation around rapidly so you are very rarely going to have a situation where a company has just one single profits warning so you can actually even wait for the first profits warning and then jump on the momentum bandwagon and actually make great returns essentially making the calculation or the you know going with the probability of another at least two or three profits warnings which are going to continue to drive the price of that particular company down another good example is high growth companies when you've got extremely high earnings growth expectations just watch what the stock market does to that company when it even disappoints slightly so we're not so you know you could have a company that's that's generating 30 40 % earnings growth but it only misses by a couple of percent and see what the stock market does to the P make rating to the multiple and if you can get on the back of one of those situations then you're going to generate very good absolute positive returns there's also because if you think about the way that the the business and the market is structured because you have a lot of lot a lot of assets and capital following long-only strategies how do these guys get paid well part of the remuneration comes from comparing them to their peer group and as sad as it may be these guys they're basically sheep and they will all follow each other so even if they might think that actually this could be a bad quarter they have an overriding fear that if they are out of the market or underexposed and they're wrong that they are therefore going to sacrifice some of their positive performance compared to their peer group and that that is more worrying to them and to their bonus at the end of the year than actually calling it right so if they're right then okay they're just in line with with their peer group but if if they're wrong then of course they're going to automatically be looking not as good from a competitive situation compared to their peer groups so it's easier for them just to basically stay invested the other aspect is well which I know that some of you will have come across as well is how many sell recommendations are there out there that are generated by the investment banks and the brokers I mean we all know it's a highly political situation you're not going to be very popular with a company if your equity analyst has got a sell on the company but your Investment Banking Department is trying to get the rights issue out of them that's coming so there's a massive sort of tendency for stocks to be rated buys and holds and also actually you know research analysts tend to be over-optimistic which means that that that means that there is greater potential for us if we find the right situation to be on the receiving end of one of those negative surprises which as I said earlier on will have a much greater effect on the stock price than maybe a positive surprise so a few guidelines at the end of the day where traders we're looking at one two three month time horizons apart from when we're Gregoire but generally speaking for most of the time we're looking at one to three month time horizons we're not investors we're not investing over you know we're not just sitting in stocks and positions over a multiple year you know sort of multi year periods now I mentioned tail risk earlier on here's a good tip for you basically especially at the beginning of your trading career you probably want to concentrate in terms of finding shorts in the large to mega cap space why because quite frankly if you've got a small or a mid cut company that's in trouble or losing money it's just a it's just a small a smaller bite size for someone to come in and put them out of their misery now it could be that they've got some kind of technology it could be patents it could be there's just one part of the business which is valuable you know if we think about Yahoo for example that and the rest of the business effectively will just get closed down now it's much easier for an acquirer a potential acquirer to come in and you know pay a smaller capital outlay so basically try to avoid being simply short of small and mid caps you want to be looking for the large to mega caps how do we define that basically greater than 10 billion dollars in terms of the market cap the problem is obviously you know we've been talking about takeovers if you are short of a take of a situation you won't get the opportunity to exercise your stop-loss so you can't sit there and say well it's all right you know I run ha stop los límites I'll just close it 10% down you won't get the opportunity it will gap up on the open and that's that we touched on this as well in terms of dividend yields there is a global hunt for yield look at where bond yields are around the world we've actually been talking a lot in the Institute for quite a long time about not just zero interest rates but negative interest rates so it's one aspect that you want to be thinking about if you short a stock that's got a 4% dividend yield that's an annualized dividend yield but basically what that means is if you're sure for a quarter then you need the price to fall by one percent just to break even before transaction costs because you're going to end up paying away the dividend to be a bit more specific in terms of what we're looking at from the the sort of earnings profiles first of all you don't look at stocks in isolation you compare them to their peer group to their industry to the relevant sector ideally what we're looking for is companies that already have a discounted p rating to their industry which is basically implying that the market is recognizing the kind of inferior nature of that company and therefore is not prepared to assign them a premium P rating we're looking for negative earnings growth or even better loss making would be good but you know it's difficult to find good shorting candidates in rising GDP environments so we're looking for at least negative earnings growth so falling earnings for this year and the next don't forget very crucially the stock market is always forward-looking we're not interested in what happened yesterday or three months ago we're looking ahead so we're looking at falling earnings growth for this year and for next if ideally if we can have a greater fall or a greater loss in the second year that's even better and of course we're looking at the company performing worse than its peer group as well almost as good as that is negative earnings growth for both years but possibly less negative in the second year than in the present year and again underperforming its peer group the next best situation we're looking for after that is flat earnings this year and going negative or as in growth is negative for the next year and again underperforming its peer group now we're sort of getting down readings of the bolar list here so but I'm just for the sake of completeness I'm just going to give you all of them in sort of least attractive most attractive order so we're now getting down the food chain here really the next best scenario after that is possibly positive earnings growth in the first period followed by flat to negative growth in the next period and also again underperforming the peer group and then really we're now scraping the bottom of the barrel here a bit negative this year followed by flat it's a positive next year this is very tricky because actually this could be the opposite to a short because this could be a recovery situation a turnaround situation so if you look at people like Warren Buffett who are classic value investors they're actually looking for these types of campaigns all the time but not too short them but to actually pick them probably before they've bottoms and being on the turnaround and really you know this comparison with the relevant industry and sector what you need to understand as well is that if the company or the stocks that you're looking at are merely as bad as the average for the industry or the sector it's probably not worth doing as a short you're probably much better off just looking at the relevant industry ETF now technical notes in terms of a resource that we can use so don't really want advertise for other people but can't avoid it short squeeze calm this is something you can subscribe to very cheaply and basically what this shows us is the up to date information which is very helpfully published in the u.s. in terms of the the total number of shares borrow or sold short because clearly to shorter share we're basically selling something that we don't own therefore we have to borrow it and what short squeeze com does is it collects the data relating to short positions in terms of the number of shares and then it compares that to the average daily volume over the previous three months you can also have a look at it versus the stock free flow so what's the free float refer to sorry exactly the shares that we can actually trade so if you have a comp here let's say you can have a company that's got a market cap of eleven billion dollars but it's got a controlling shareholder that maybe controls it through some super voting shares they only own 25% on the capital but they've got over 50% of the votes because they've got a different classes share then we need to understand that the liquidity is not maybe what we thought it was going to be because those shares are basically taken out of the trading volume okay so we want to understand this relationship between the number of shares borrowed the number of shares that are traded on an average daily basis and also the the free float so the number the amount of shares that are actually tradable by the public why are we looking at that because if the amount of stock borrowed is of let's say an elevated level now I know the next question that's coming then that could potentially mean that we're going to get a short squeeze on the stock which as was mentioned earlier on is got nothing to do with the fundamentals of the of the company but it's because we've got maybe a consensual short situation where there are another shares on Bora relative to the average daily volume some bears or shorts decide to head for the door they may be lucky in profits there may have been at an item of news flow whatever the reason but then the stock starts to pick up the volume starts to pick up the other people who assured of it obviously start taking note because the P&L is moving before you know it you've got what's called a short squeeze so this is what we're trying to guard against that actually once has happened of course can be an opportunity but we don't it be the wrong side of a short squeeze and you know so people will often say well what's the optimal number of days to cover the answer is we can't give you a straightforward answer but one thing that you can do is you know if it starts getting into the weeks so clearly there's five business days in a week and if you've got sort of 20 days of volume to cover in terms of stock being borrowed clearly that's four weeks worth of volume and that's assuming that all the volume is done by the people who are short which is of course completely unrealistic so that gives you an idea now that's not a magic number but you know if you start getting into the numbers of weeks of short interest rather than days to cover then you're getting into a sort of elevator situation the other thing to compare it to is if you look at the these this is not the only source actually but but on short squeeze you can actually see the history of the short interest so it's actually quite useful to see what's been going on because you might look at the situation seeing well that's an elevated situation however actually it's now half what it was two weeks ago so the short interest has actually been coming down so that's why we can't just give you a bullet you know 14 days of short interest equals buy short back okay so in terms of specifically what type of candidates are we looking for well you know there's the plain old-fashioned fraud so kind of thinking Tyco valiant that sort of situation basically where the management has essentially misled the market you know valiant was something that you didn't have to be a forensic accountant or the saw the stock specialist in the equity department that investment bank a to get on the bandwagon here because there was ample opportunity once the issue started to emerge to actually just get on the back of a momentum trade here so it's not like basically that stock opened down after some information emerged and that was that you know the story developed and obviously the story hasn't ended yet over a quite an extended period of time and you know the golden rule really with the stock market is if the stock market will always shoot first ask questions later so it's a bit like the the sort of prophets warning example there's never going to be just one prophets warning and equally just because you missed the first move down on something like that doesn't mean that there's not an awful lot to be gained from still shorting it you know one of the obvious examples of a bubble or an inflation situation is the the.com boom at the end of the 90s it's quite amazing if you if you if you're around for long enough you watch human beings making the same mistakes over and over again so the words that you should be most fearful of in an investment environment are this time it's different it's not it's always the same there might be a different cause it might be a different bubble but bubbles will always occur in whatever asset class in whichever sector it's not the same reason you know obviously last time around it was subprime before that we had the the dot-com boom but bubbles will emerge it's just human nature so these are the kind of situations that we're looking out for as well now I mentioned earlier on the online retail versus bricks and mortar retail example what I'm referring to there is SiC secular trends so trying to work out industries and companies which are affected by secular trends so that's an example another example would be for example when Apple comes along with the iPhone who was their biggest competitor at the time yep blackberry who's got BlackBerry's these days yeah it's kind of like a retro investment so you know when you've got some kind of technological change then you know that can really reap rewards also when I wrote this I was at this this part about insiders and how they treat their company it kind of took me back to reading reminiscences of a stock operator don't know if any of you have ever read that I would advise it it's a really good book it gets a bit monotonous but and he does labor the point but it's a great read and there's there's a part of it where he talks about this is Jesse Livermore the the trader and he makes a point of visiting corporate headquarters of companies that he's thinking about investing in and if he goes into that company's headquarters and they've got expensive stationery and nice artworks and the CEO sits and a great big fat leather chair with a massive desk but nothing on it he goes out and shorts that stock so how does the company how does a company management treat its shareholders how does it treat its providers of capital so you see this a lot in the natural resources space the junior natural resources space they're called lifestyle companies I've seen it time and time again I've made those mistakes myself where basically the management see the company is they're kind of their piggy bank these things they're really obvious you just have to look for them and then there's another situation which I mean Jim Chanos is very famous we call him a short investor over here I think his argument it's obviously a lot more complicated but if you want to sort of put it in a knot his argument re Tesla and SolarCity is that basically these companies will always have a gluttonous appetite for cash they are going to continuously in his view be coming back to the market to raise capital these are potentially good shorting opportunities so you live in a great environment here where you have lots of information that's freely available to you so you can look at the SEC filings you can look at the tank use the tank age the proxies you can get an incredible amount of information are those yes a lot it's boring yes it's labor-intensive but hard sorts are hard to find the other thing that we've already touched upon as well is obviously trading patterns short interest volumes and price actions so this is more from the technical side of things we're looking for elevated short interest as potentially an indicator of maybe a short that's a consensual situation so kind of beware and that goes hand-in-hand also with the trading volumes and the price action so in terms of you know the types of situations in summary we're looking at potentially fraudulent situations straightforward earnings disappointment situations overhyped stocks industries or sectors with should we say secular trends that are taking place so they've got the macroeconomics is against them and then situations where companies are basically having issues with their working capital they're finding it hard to shift their stock which leads to high inventories and we can look at that not on an isolated basis but we want to compare that to their history and compared to their revenues and sales and in all of those examples what we're always looking for and actually this is true of longs as well we're always King those traders we want catalysts we want something that's going to cause the share price to go in our favor so we can't always identify them it's it's not easy but we want to try to think about well what is the caste is going to be here is this company about to announce a profits warning is there some other kind of negative information that we think on a probability adjusted basis could emerge in the next three months which will get the share price going in the way that we needed to go as I've said as well we want to try and avoid consensus short situations where there are high levels of short interest unless it does work sometimes you know so for example great trade back in even though you know virtually everybody did it great trade back in in 2000 and when did Northern Rock garner was it oh 700 807 yeah I mean we all knew what was going to happen and you got days where basically the stock price became an options price so you knew there would be days where you've got the proverbial squeezed but we also knew the whole you know the thing was going to go so in those kind of situations yeah that's a say it's the same with research in motion with the BlackBerry to a certain extent bears Lehman Brothers in those situations they were consensus shorts because they were very obvious but you just had to be aware that because of that you were going to suffer days where it would go against you quite painfully which means that you need to size the situation properly you also need to get your timing pretty spot-on in terms of when you actually initiate the situation and if we think about industry obsolescence so this is sort of the BlackBerry point it really is basically it's just the opposite of a concept stock so there's nothing although it's harder to find good short it is because of the expanding GDP situation concert' conceptually there isn't anything that we're doing that's different so the way that we look at the world from a long perspective it's just we're flipping a round it's just like looking in the mirror it's like being ambidextrous okay another good example so we think about last year SP was was basically flat on the year however if you got in early on the old price plunge obviously they were fantastic returns to be made from the shorting perspective but try and think laterally try and think a bit outside the box to coin a very very corny phrase don't just think about the oil and gas companies deal the service providers or the pipe providers or the you know the people who rent the rigs or whoever it is also think about you know a great trade was who's exposed to lending to these companies that was one of the big fears at the beginning of this year end of last year beginning this year who in the finance sector the finance sector not the owning gas sector is exposed to these guys when they start to go under because of whether all prices how do we extend the chain and this is how we this is how we find some smart ideas there beyond things to try to avoid you know this is true of whether we're looking at the long side or the short side you've got to do your work there's no way around it you've got to do your work don't just piggyback on somebody else's idea because what will happen is that you'll have no conviction with that situation with your position and as soon as it goes against you which it will unless your timing is perfect and believe me any trader who tells you that they're perfect at timing is a liar most of us if we buy the bottom or sell the top it's as we used to say it's better lucky than clever so inevitably you will be faced with initially positions that are losing before they make now if you've got if you haven't done the work and you've got no conviction you'll close that trade so you need to do the work and you need to not just piggyback of other people's ideas this is a this is a difficult situation so identifying this comes with the experience really understanding difference between management teams and who has an impressive management team and who's got a pretty average management team because you can have situations where a company is just exposed to a temporary or you know a short-term negative situation which is maybe affecting me in the entire sector however if it's a good management team they will find a solution because they understand their business and they know what to do about it so again you know you can't just look at the numbers you've got to be able to understand which comes to experience you've got on selling difference between a good management and an average or a bad management terms of just trading it's basic human nature we've seen it time and time again in the professional world let alone in the retail world the natural human nature is to basically run losers for too long and cut winners too early very simple way around that we have hard stop-loss limits for our losses and we've got rolling stock losses for our winners so we kind of take the emotion out of it completely in terms of timing timing is very difficult especially when you've got you know an awkward trending market one approach we can take is as I described with the valiant situation wait for the situation to break wait for it to crack and then jump on the momentum another way of doing it is we can begin with smaller positions what we call style positions and then once we've got our catalysts which maybe we hadn't identified or we didn't know when it was going to come but then the catalyst arrives and the momentum begins we can then size up the position because the problem is that if we take a full sized short situation before the position before the situation develops then we can end up being short term maybe on the wrong end of the technicals but actually medium to longer term fundamentally were absolutely correct but because we put on a full position we've really got nowhere to go so just in closing obviously we've hammered this point to you you cannot short in an IRA you need a retail brokerage account to do that you need to consider shorting you need to be able to do it because it takes down volatility of returns if you're good at it it actually increases your returns and it's absolutely indispensable to running a sensible risk adjusted portfolio that's why hedge funds are long short because it's not just about your positive returns it's about your risk adjusted returns what are your draw downs like what happens on the day when somebody at the the New York Fed says something which spooks the market and they suddenly think oh my god the 25 basis points is coming and the market drops a percent one 1/2 percent we need to be able to make money when these situations happen so this is why we need to be able to shore as we've said it's tricky in an expanding GDP environment because in the kind of rising tide lifts all boats situation if you've shorted a stock in the wrong sector then even if it's an average stock in the sector it still is going to go up which means that you're going to lose on it in terms of the sizing of situations we touched on this in the previous slide if you have y number of lumps in your portfolio then maybe you might say until the situation has broken has developed I'm only going to have half positions on the short side clearly that implies that you're going to need to have twice the number of ideas on the short side this is tricky it's difficult we can do it but we need to we need to be really focused on it and prepared to do the work sometimes the best you can do is hedge out your market risk or the sector stroke industry risk it's not a disgrace sometimes we have to do that now I haven't even mentioned options we're going to have two speakers later on Raj and Chris who will be going through in great detail how can utilize options obviously in this situation we're talking about using put options and always as good traders as good PMS what we're looking for is we're looking for the attractive risk reward profile and of course the crucial aspect when we four options into the equation is the timing these guys are going to talk to you about that later on so lastly it's difficult to find good shorts however they're extremely necessary so do not give up be patient and the great thing is that if you find a few good short candidates each year and you get it right once the situation breaks once it develops what you do is you size up on it you go with the momentum and you can make money and great returns very quickly because things fall a lot faster than they go up so then when you've leaned into that situation you can size up and your returns will be impressive and basically you know you've got to use these processes the criteria that we've talked about all the time but certainly and most satisfyingly as well when you get good short ideas and they work not only are the returns fantastic but it's actually for some reason it just feels even more satisfactory so thank you very much [Applause]

Channel: InstituteofTrading

Views: 79,535

Keywords: Institute of Trading and Portfolio Management, Hedge Funds, Investments Banks, Trading, Stock Market, SP500, NYSE, Millionaire, Billionaire, Money, Investing, Finance, Jason McDonald

Id: 0echDSMM7RE

Length: 45min 51sec (2751 seconds)

Published: Fri Oct 18 2019