May 29 (Bloomberg) -- Short sellers are betting against U.S. stocks like never before as the Standard & Poor's 500 Index approaches an all-time high. That's making some of the biggest bulls even more optimistic. ``What the short seller appears to be doing is doubling down,'' said Kenneth Fisher, who oversees about $40 billion as chairman of Fisher Investments in Woodside, California. ``You love to see it, because if you believe there is a basic driver to the bull market, they're going to get run over.'' Continued: http://www.bloomberg.com/apps/news?pid=20601087&sid=ahMn3AUnD_CY&refer=home
Interesting article, but the more I read the more I realized that the data means nothing. If there's really so much money out there and much of the shorting is due to the prevalence of hedge funds in the market, only certain stocks will be affected by short covering....the rest will likely be covered when/if the market does correct or slowly. Assets managed by hedge funds ballooned to $1.57 trillion, more than double the amount in 2001, estimates by Chicago-based Hedge Fund Research Inc. show. Some investors say the growth of the loosely regulated investment partnerships that can buy, sell and short any asset and that allow managers to share in the profits helps explain the increase. It also makes the information less useful for predicting market performance. ``You have to take that with a grain of salt,'' said Russ Koesterich, who helps manage $1.8 trillion at Barclays Global Investors in San Francisco. ``More participants are shorting. That may be having some impact on distorting the data.''
the same article has: Shares of companies in the S&P 500 trade at an average 17.8 times earnings, compared with 32.8 times at the end of the last bull market, according to data compiled by Bloomberg. how true do you find that?
Oh yeah, love to see it... the "money pump"... that wonderful basic driver which will eventually give us run away inflation, currency debasement, and bankruptcy of the middle class (most of the sort-or-rich guys, too)
Well, if you truly are a stock picker, you can make money both ways. Take JSDA, RACK or FMT (from 52 week high levels), as just three of many examples, for example. There will be time to short the indexes, too, though. It's drawing nearer. You're right that it is wise to wait for technical damage.
Recall early 2000? Smart money was shorting prior to the top. One had to be patient for a little while longer and then made a ton of $$$$. No different than longs buying as a market tanks waiting for the reversal. Example: I shorted VTSS at $96 in early Feb. 2000. Next day it was $116. In a couple days I was profitable. Then by March we had the start of the NAZ tanking. Patience paid off. Covered at a nice profit and today VTSS trades at $1 and change. Further, I have shorted many times stocks making 52 week highs on weak volume and made $$$. Most traders I know include shorting as part of their strategy.
These statistics are meaningless since they fail to account for the fact that many funds are short and long in the same stocks so they don't have to deal with the BS uptick rule. Yeah, it's illegal but they don't give a fuck. They have multiple accounts with multiple brokers in more than 1 country which makes it virtually impossible to figure out who's really short/long. The idea is simply to be ready with enough amunition for the next slaughter and not face the usual BS of "not available to borrow" or can only short on uptick! Ken Fisher? That guy turned into a bagholder years ago when he started managing other idiots' dough and is now *always* bullish. Just another asset collector, nothing else.
So what? Of course earnings mean more than they did in 2000...what's your point? Historically, 17.8 is high I believe as an overall PE, even for the S&P. I may be mistaken but these broad indicators mean little if you trade stocks on an individual basis. I've bought stocks on the NYSE, NASDAQ, and OTC today. I looked at the indices for the second time today about 20 minutes ago...indices don't mean shit. Breadth in the past few weeks, even in the face of rising indices should have told you that.