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Student of financial history
  • The Big Short 0 comments
    Aug 24, 2010 8:28 PM

     If your are of the conviction that stock markets will slump over the next months, here are some ideas how to play that and maximize your gains:

    1. Pyramiding shorts:

    Dangerous, but you can make incredible gains. See Jessie Livermore 1929. 

    2. Short oil, copper

    Resources are a leading indicator and show big moves. 

    3. Short the RTX, the Russian stock market

    The Russian stock market tends to be very cyclical as the entire economy depends on oil revenues. Also currency weakens in downturn which leads to capital flights. 

    4. Short Greek, Italian, Spanish banks

    Well pretty self-explaining

    5. Short the most cyclical stocks with high leverage


    That does not mean that I necessarily believe we will see a huge stock market drop tomorrow. But it is always good to be prepared...

    Disclosure: Just a small short on the S&P till now

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