First off, I have never said that oil is going to 150 or 200 or even 300. I have never posted any sort of prediction on ET regarding oil going higher. Those are YOUR words, not mine. Secondly, you obviously have little understanding of market history and "bubbles" . . . Even if what you say is true, and that oil is in a "bubble" that will undoubtedly see a 15-25% decline, you have NO IDEA FROM WHAT LEVEL this will occur!!! Wall Street is littered with traders that fought very strong TRENDS ( bubble or no bubble ) and "averaged-down" into oblivion, only to lose a majority of their capital because THEY WERE EARLY! You keep talking in your posts about what the DCR or DUG will be worth IF oil goes back below $100. But what if it heads to $130, or $140, with any ensuing 20% correction keeping it above $100 for the rest of this year? You seem to conveniently IGNORE this possibility in your rabid "bubble-hunting" analysis. (Try taking a look at the historical charts of U.S. Surgical, Presstek, or Iomega for a lesson on this. Tons of traders got "blown-out" shorting these puppies all the way up, only to have nothing to show for it after these stocks collapsed back down to Earth. They were "early" and got killed! ) For some strange reason, this not so insignificant fact seems to escape you.
listen to him, there is some many other ways to make money that shorting things that go up everyday just seem silly, if not downright suicidal
Julian Robertson comes to mind as they closed shop March 30, 2000 after being squeezed to death by short growth tech and long value bets: http://query.nytimes.com/gst/fullpage.html?res=9C0DE3D7123CF932A05750C0A9669C8B63 March 30... such irony.
Well, seeing as Robertson has made multiple billions since 2000, he didn't exactly "average down into oblivion" did he? Two bearable down years after a huge run, followed by another huge run, is definitely not a wipeout. Anyone who shorted techs in 1999-2000 and lost 20% had fairly good risk management, seeing as many of them were up 100, 200, 500, 1000%.
If it's only 1% of your portfolio, why even bother having the trade on? The upside if and when you are right will be miniscule - one or two tenths of a percent.
They only got "killed" if they had no risk management. A stock that goes up 10 fold is no threat to the survival of any competent trader, even if he is repeatedly playing the short side for the entire run up.
I think the takeaway is not that Robertson closed up Tiger and walked away with money in the bank. The takeaway is he got caught shorting an obvious bubble like a deer in the headlights and eventually got his head handed by the market. He capitulated on the exact peak of the tech market. Spotting a bubble is no guarantee one will end up making money with that analysis. See S2007S and crude.
thats very true, the problem is you need to do everything right and be very good at that to be profitable trading like that. if the failure rate among traders is something like 90% then it must be something like 97% for 'bubble catchers'(I have no evidence to back this up) plus it will be probably more painful as well(which was one of the reasons soros changed his approach)