Quote:
Originally Posted by bovverd
Are these companies worth shorting with options ?
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Only if you really believe that your valuation is correct. Did you ESTIMATE the right PE? Did you ESTIMATE the right growth rate? Did you ESTIMATE the right future returns?
A lot of guesswork here. The bit that makes me smile over and over again, is where you need to ESTIMATE the right PE --which itself is an ESTIMATE of what people FEEL the stock should be valued at.
Shorting is a leveraged tool. You may lose more than you have. This can be a very very very dangerous thing for your wallet and self esteem.
At then end of the day, when you are investing you are placing a bet. Just make sure that you know the odds are on your side. You need to eliminate as many variables as possible. You won't if your valuation method depends on guessing the right PE (which is completely nuts).
I would not consider it.