Arguably you could say the people trying to snaffle up "cheap" shares by the bucket load are being greedy ... 2 sides to this coin.
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Just spent my couple of thousand airpoints at mitre 10 so have a project to do at home if/when lockdown occurs. Also means not concerned about potentially having them frozen or taken from me. Do wonder if that is likely
Some say shorting is immoral but whatever ‘shorters’ are unpopular.
Like the ‘short and distort’ phrase in this Forbes piece
https://fortune.com/2018/06/23/why-s...elling-shorts/
Argument
Critics say short sellers can transform downturns into full-blown panics. They also point to the ability of shorts to hoodwink investors by spreading false rumors before exiting a trade, a technique known as “short and distort.”
I don't know why people rail against shorters.
At the end of a selloff, the first buyers are actually people covering their shorts - this provides liquidity and price discovery to a market. The nature of shorting means that you have to monetise your position much earlier than a long would (shorting has a max 100% gain, being long has a potential unlimited gain). This is why you also get big short-covering rallies during bear markets that actually allow longs to exit at a better price.
Shorters also have other risks to contend with like takeover bids for companies you are short (providing a brutal loss) or government intervention.
If you had done any actual shorting you would realise it's a tough game, it's not freewheeling predators screwing everyone else. And anyone short Air NZ is doing the world a favour by expediting the share price's journey to its current real value (zero).
Bit of good news from last week. The government is covering some of the airlines government charges as part of the aviation support package.
You can also expect airfare costs to rocket in price. As all those fixed costs get spread across a much smaller number of tickets. NZ public won't like that but it's unavoidable.Quote:
Financial support to airlines to pay passenger-based government charges for the next 6 months ($163 million) and to cover Airways related fees for the next six months ($37 million),
Any fee rises or pricing reviews from agencies that charge fees at the border (Ministry for Primary Industries, Civil Aviation Authority, Aviation Security Service, Customs, Airways) are put on hold for 12 months Source
So its okay for people to take heavily leveraged long positions but an unleveraged short position is gambling ? Yeah, whatever...
Many people have read accounts of billionaires who try and crash a companies stock price by shorting vast amounts of its stock, spreading disinformation and then taking advantage of the situation and cashing out.
I think we need to make a distinction between that sort of activity and some investors taking a small short position here because they honestly believe the airline in its current form will fail and hence that short position is considered to be an ideal hedge against other modest long positions in the market.
I am not spreading disinformation. My real quick and rough back of the envelope calculation showed estimated annual losses of at least $1,585m and I suggested the true figure was probably a bit higher BUT was exceeded by Rob Fyfe CEO of the airlines CEO for 7 years who estimated their monthly operating loss at $211m = $2,532m, nearly one billion dollars per annum higher than my estimate. I think he would have a much better handle on the situation that I would.
Since his estimate the borders have been shut and the Govt have recommended against all non essential domestic travel so its crystal clear their monthly operating loss going forward will be significantly higher than $211m ! I estimate it at circa $300m per month.
No need to justify your short position with the billionaire example.
You could just as equally argue that "people have read accounts of billionaires who try and increase a companies stock price by buying vast amounts of its stock, spreading disinformation and then taking advantage of the situation and cashing out". Using that argument one could theories that going "long" in a stock should be banned :)