Help Me! I've Fallen And Can't Get Up... or, I Am A Fool And Lost My Shorts

Discussion in 'Stock Market Forum' started by baudwalk, Nov 22, 2015.

  1. baudwalk

    baudwalk Senior Investor

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    http://www.marketwatch.com/story/he...hed-and-now-i-owe-e-trade-10644556-2015-11-19
    A fool and his money are always separated. The author suggests the reader should at least feel sorry for the guy. Frankly, I don't. His wife should be able to file for divorce based upon mental insufficiency. So many investing guidelines were broken by Campbell so as to make this a required case study in business/investing courses for decades to come. To invest 100% of one's portfolio in a bio-anything is idiotic. To play with short-selling and take one's eye off an open after-hours market is worse than idiotic. And so many more, it isn't worth trying to list them all. Pathetic. What's even more surprising is that a number of persons contributed ~$5300 via a funding site. Maybe a good tax accountant could alleviate a bit of the damage but his carry forward losses will last mote than a lifetime.
     
    Last edited by a moderator: Jul 8, 2016
  2. crimsonghost747

    crimsonghost747 Senior Investor

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    Yup, this has been making headlines in the financial world lately. What an idiot. I hope he keeps paying for this for the rest of his life, and with over 100k of debt he certainly will be at it for a while.
     
  3. JR Ewing

    JR Ewing Super Moderator Staff Member

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  4. petesede

    petesede Guest

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    I have never shorted a company in my life. In my opinion, shorting is a testosterone driven tool for egomaniacs. You have almost the same upside potential just by using put options, and your losses are limited to the amount you spent on the puts. It is like playing roulette, the worst you can do is lose the chips you put on the table. Shorting, especially small cap companies, can quickly put you on the window-sill. I use puts all the time, especially when I smell blood in the water, but even if I am 100% sure of myself, I would never short.
     
  5. crimsonghost747

    crimsonghost747 Senior Investor

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    Yeah shorting is definitely a dangerous business, losses are only limited by your broker selling everything you had due to margin requirements. It's a bit strange that this didn't happen, I don't know many brokers who allow their customers to go 100k in debt with no equities.
     
  6. JR Ewing

    JR Ewing Super Moderator Staff Member

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    If I'm going to use actual short positions, it's in limited amounts on companies that tend to be rather large and low-beta. The low-beta stocks generally don't work so well with options - unless you're on the selling end. And it's also risky to sell an option that isn't covered by an actual stock position.
     
  7. turt

    turt Guest

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    So how does one actually cover these short positions? Did eTrade cover the shares automatically and lay a debt on him?
     
  8. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Yeah, he's in debt up to his eyeballs to e-trade now.

    This is not all that uncommon. It's just that he made the public aware of his situation when he started that gofundme account.
     
  9. crimsonghost747

    crimsonghost747 Senior Investor

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    Yeah I imagine this happening quite a bit. Is anyone with e-trade? Do they really let you have THAT much margin without any collateral? Or did they simply not manage to sell his positions fast enough? (ie. there was a huge drop when the markets were closed)
     
  10. Onionman

    Onionman Senior Investor

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    Ouch! His story's a pretty painful one. I guess we all get drawn in by the drivers of fear and greed to some degree. But when you're clearly sucked in by overconfidence bias and are willing to start shorting then you're looking for trouble.

    But I've got to hand it to him - looking to be crowdfunded to cover his losses. Desperate men and desperate measures springs to mind, not that there seems to be much sympathy for him...
     

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