Displaying items by tag: short

(Los Angeles)

One prominent short seller has come out warning investors about Tesla, 2020’s rocket ship stock. Citron Research, a legendary short-seller, says that investors should dump Tesla’s stock, as the gains have all been “computer-generated”. The stock closed up 14% again yesterday. Citron says “This is obviously a computer-generated rally, it’s not a reflection on the company, or on valuation. It’s just a trade … Yes, I'm shorting it…whoever bought it at these prices has to flush it out, and when it flushes, it’s going to flush hard.” The firm also referred to Tesla’s stock as a casino.

FINSUM: Tesla is up 112% in 2020. This is a case study in irrational exuberance, or what might now be called “momentum”.

(Los Angeles)

Tesla’s stock has been rising almost as fast as Elon Musk’s rocket ship ambitions. Not only is the stock up almost 100% this year already (!), but shares rose by a shocking 20% on Monday alone. Why? The lack of a concrete reason is what makes the move alarming. There was some relatively minor news from a supplier about battery prices, but otherwise nothing. That is making many traders expect that a short squeeze has hold of the market, making gains artificial and moving the stock dangerously away from its moving averages.

FINSUM: Tesla shares seem to be showing a high degree of irrational exuberance right now. Any bad news could cause a huge drop.

(New York)

Looking at the market’s performance, it is probably a good time to short some shares. The majority of gains for the sector are being driven by a handful of high-flying tech shares, but the majority of stocks are doing much. Therefore, it seems like a good bet to short certain under-performing sectors. However, the options for doing so aren’t great, as the majority of short ETFs cover the whole market or are heavily leveraged. Now there is a new option though, the AdvisorShares Dorsey Wright Short ETF. The ETF shorts only the market’s 80 to 100 weakest mid and large caps, and it is one of only four short ETFs that don’t seek to replicate an index’s return.

FINSUM: This seems like a very good application of the smart beta concept.