[formvoltron]

nah the very worst thing about the spacex ipo is that schwab won't allow me to short it. has nothing to do with the recency of the issue. today i shorted some skhy when i realized it's trading about 30% over the Korean share price (I could be wrong about that)

[onlyrealcuzzo]

You can short it elsewhere.

Schwab won't let you, because even if you're 95% right, you'll still probably lose 95% of your money...

It's quite difficult to be 100% right...

[WarmWash]

You and your broker have to be pretty damn brazen to iron grip a highly liquid stock all the ways down to -95%.

[inigyou]

Shorts can go down to -1000% and beyond.

[WarmWash]

Yes, but you have to hold through that, and your broker also needs to let you hold through it.

The risk of a stock like spaceX gapping up 10x in an instant is virtually zero.

[inigyou]

So if I wouldn't lend someone 9 times their assets I can't let them have that position.

[WarmWash]

Yes, but you have to hold through that, and your broker also needs to let you hold through it.

[KellyCriterion]

Not true: Depending on product and regulatory regime, for distinct trader/customer groups there may be distinct rules.

And if you are buying an instrument where you can lose more than you invested, the approach maybe wrong? :-)

[gottorf]

> And if you are buying an instrument where you can lose more than you invested, the approach maybe wrong? :-)

This is precisely why shorting can lose more than you "invest", because you're not buying an instrument, you're selling it with the intent (or promise, depending on what kind of instrument it is) to buy it back later, hopefully at a lower price.

The risk is unbounded.

[KellyCriterion]

Not true:

https://en.wikipedia.org/wiki/Turbo_(finance)

There are, as said, depending on juristic regime, products which do not let you lose more than you invested.

On top of this comes national regulation: E.g. in some EU countries, retail traders are exempt from s.c. "margin calls" and the broker is required by regulation to "just close and not ask for more"

Source: Im living in one of these EU countries

[formvoltron]

dang all these comments make me want to short more. gimmie your monies!

a company who says we'll have ai in space, meanwhile you can stick ai in the ocean and use ocean water to cool & still have access for upgrade cycles.

meanwhile china and japan and bezos all landing reusable rockets.

meanwhile maybe ai runs locally on phones (today's announcement of deepseek in the iphone in china)

ummmm. short in force!

[KellyCriterion]

...downvoted 2 times for telling the truth about EU or LATAM regulatory regmies, wow,thanks :-D

[dheera]

You can synthetic short if you have options level 4

[chasd00]

> nah the very worst thing about the spacex ipo is that schwab won't allow me to short it.

there are easier ways to make money than betting against Elon Musk. See Tesla and how well it worked out for short sellers there.

I like SpaceX as a company (especially Starlink) but it's over valued in my opinion. In about a year when there's a little bit of public financial history and the dilution is over i'll probably buy in.

[mlinhares]

The illusion isn't over for Tesla, not a chance it will be over for SpaceX in a year.

[runarberg]

I for one am glad that you were not allowed to short SpaceX. People gaming the market for their own profits are the worst kind of exploiters and swindlers. You contribute absolutely nothing while siphoning the profits that workers make, lowering the salaries of everyone that actually works for a living.

Note this has nothing to do with my feelings about SpaceX. I am Elon hater nr. 1 and hope SpaceX burns to dust, I only hope speculative investors burn down with it.

EDIT/CLARIFICATION: This post is fundamentally anti-capitalist. You may feel like I am mis-informed or misunderstanding. I am both of theses things if and only if Capitalism truly is self-evident.

[z2]

Putting one's money where their mouth is in expressing that a company's stock appears overvalued is very low on my list of "things that exploit the proletariat."

[runarberg]

I don’t care the method people use to game the market. They are still participating in a systematic exploitation of workers and deserve the maximum of nothing of what they hope to gain.

My parent wanted to make some unearned money by making speculations and gambles. If they were allowed and if they were successful, they would have made a bunch of money while contributing nothing. Every single dollar they would have made in their speculative gamble would have come from somebody else who actually contributed and but didn’t get the full value from their work.

I am glad that my parent was denied the privileged to participate in this systematic exploitation. The ideal number of speculative investors is zero, and any movement towards that number is an improvement for workers.

[rurp]

What a weird misunderstanding. Shorting reduces fraud in the market, and making it harder to short increases it. There's a reason shady managers had shorts, it increases the chances their bad behavior will be uncovered and punished financially.

[positr0n]

How is shorting a stock gaming the market?

You feel a stock is overvalued and you short it. You feel a stock is undervalued and you buy it. What's the difference?

[inigyou]

The former is likely to lose you money, even if you're right, while the latter is likely to gain you money.

[m000]

God forbid an individual makes a profit from shorting. What would be left for hedge funds then? /s

[tyre]

I'm not an investor in SpaceX but I don't think shorting stocks at IPO should be allowed. The market should be given time to settle on a price, and it's unlikely that anyone needs to short it on day 1 for hedging. It's purely price speculation.

Yeah, I know why people _want to_ (betting), but it doesn't serve a broader economic purpose.

[reactordev]

Going long or going short is your bet on the market. If you can go long, you should be allowed to go short. Restrictions on any trading means you don’t have confidence in the price in which case it shouldn’t be available for trade.

[tclancy]

Betting is what everyone who jumped into retail investing and meme stocks does with it, but shorts are a valuable tool in the economy for hedging risk. It also is a good indicator for fraud too.

[clickety_clack]

The market “settling on a price” includes the actions of short sellers.

[inigyou]

Do I need to be able to short bananas for the market to settle on the price of a banana?

[notahacker]

If you're confident the price of bananas will fall tomorrow you absolutely can sign a contract to deliver bananas next week at the current price and then buy them when the price drops...

[tyre]

My point is that no one is trying to short SpaceX as a hedge. It’s simply gambling.

I agree that hedging is real and useful. The comment I’m replying to isn’t trying to do that.

[wredcoll]

Yes, you can but does that ability benefit the population/nation/market as a whole?

[clickety_clack]

Yes, because the guy buying your bananas is able to make banana-buying decisions for next week based on the price you give him.

You’re not going to make up a silly low number because you actually have to buy the bananas yourself at some point, and you help price discovery because now that guy isn’t buying bananas at a higher price than someone is willing to sell them for.

[notahacker]

Well yes, to the extent the possibility to do that helps stop silly price spikes from a very short term shortage of bananas.

[8note]

yes because shorts can also be wrong, and the buyer knows they have a stable price

[toomuchtodo]

Why is line go up price discovery acceptable, but line go down price discovery not? If the shares are trading, you should be able to short, it’s arbitrary to disallow it. It is quite literally a part of the market settling on a price.

(under the assumption your broker is managing their risk if your losses from a short position potentially exceeds capital available for liquidation if the trade moves against you)

[fastball]

Line go down discovery is acceptable (that is what selling a share is). The reason you might not want options trading very early after an IPO is because the market is frothy enough without the additional layer of complexity.

[toomuchtodo]

Certainly, its reasonable for a delay in options being available while market makers prepare to make the market for those options. But shorting? Day 1, the shares are trading and available to borrow to sell to short.

[inigyou]

Are they actually? How many intermediate steps are involved in finding shares to borrow for a short? I imagine they have to be transferred to some central depository with the feature, for a start, and that takes 2-4 days

[toomuchtodo]

Your broker will locate and borrow the shares from an available pool (such as other clients' portfolios), sell them on your behalf, and hold the cash. They don't have to go to the clearinghouse.

[somenameforme]

Because lines tend to trend up over time. You're betting on lines going down, and paying rent while doing so as shorting requires you to rent/borrow shares from somebody else. It's an extremely high risk activity that can easily result in an investor losing a very large amount of money.

Elon Musk is politicized so you're going to have people wanting to short against him, for reasons other than it being seen as a rational and sound investment strategy. This is one reason brokers tend to restrict this activity to certain types of investors who are more able to appreciate the risks, to say nothing of baseline necessities like needing a margin account to cover potential losses. Shorting is just very different than buying a stock.

[shermantanktop]

“Broader economic purpose”?

It’s all betting.

If someone wants to dress it up in jargon or talk about beneficial second order effects, they can. But if putting money on an outcome you can’t control isn’t gambling, I don’t know what is.

[quickthrowman]

Gambling is placing a wager with a negative expected value. If you can gain an edge and have positive EV, it’s not gambling. That’s the distinction between poker and slots. A skilled poker player can take advantage of positive EV positions while slots are programmed to have negative EV. There are traders that have positive EV bets.

[names_are_hard]

Is buying insurance gambling? Is giving your second cousin 100k some money so he can open up is restaurant gambling if you expect a percent of the profits but won't actively be involved in advising him on running the business?

[shermantanktop]

Yes.

[KellyCriterion]

Mh.... is there a difference between "betting" and "gambling" from wording here?

[lordnacho]

To settle on a price, you need smart investors to be able to push it either way, which they need shorting and leverage for.

Plus there's option traders who naturally need to go short sometimes.

[positr0n]

The market will more efficiently settle on a price if market participants can push the price up (buying) and push the price down (shorting).

[wredcoll]

I'm not certain you're right, but I think this opinion deserves considerably more (fair) discusson than it's getting.

Lots of replies either personally benefit or just assume the "way things are" is the best, but the stock market has gotten highly abstracted from the original intention of providing capital to grow companies via means other than bank loans.

I get the argument that shorts and friends help make the price the stock is being sold at more accurate, and I believe there's some truth there, but also we constantly see stock prices fluctuate by 10+% in a single day and I have trouble believing the actual value of all these companies changed that much in a single 24 period.

[names_are_hard]

Well the idea that the price of a stock represents the actual value of the company can be complicated but the realization that it's super hard to figure out what the actual value of a company really is, because figuring that out really requires a crystal ball, because you need to know exactly how much money the company will earn in the future, among other things.

None of us have that crystal ball, so market participants try to guess at the future. It's not difficult to believe that those guesses can swing a lot in a single day. Just trying to figure out whether or the Hormuz will be open next week can give you whiplash.

[wat10000]

Borrowing and selling are both pretty straightforward financial actions. It seems strange to say you're not allowed to combine the two.

[8note]

the company manipulates itself to look its best possible, taking long term bad decisions in order to juice the value, and wont have more immediate items to juice the share price again for a while

its a reasonable expectation that 3 months after an IPO the price will be lower than it was at IPO

not really a bet so much as that on average the prices at IPO are a local maxima

[shafyy]

Isn't it all speculation always though? That's why stock picking doesn't work and ETFs are popular.