Counter-intuitive Shorts (not the kind you swim in)
My blog entries are written with more than just entertainment in mind...I write them to get your gray matter moving and to shake myself and everyone else out of this euphoric haze that playing games puts us in.
You know, the Romans would hold games for months on end to distract and satiate the masses. Of course, while the masses were busy enjoying the games, the wise and powerful were selling them concessions, memorabilia, housing, nightlife, etc.
How is this related to the title of this blog entry? I just want to shake it up a little for anyone who takes investing seriously. As I have stated before, CAPS has its redeeming qualities, but it is also a big distraction (very entertaining and exciting) for all of us who use it...kind of like the Roman games.
One of your option here at CAPS is a choice to "short" stocks, essentially betting they will underperform the S&P. I ask, "What is the purpose for this except to entertain and tickle your "I knew it! bone." Yes, a person might feel great to be #1 (or close to it) here at CAPS, but the fact is, in real life you just can't invest like most of the players here, because shorting does not work in the real investing world like it does in this game. You see here, a person can bet against a stock for an indefinite period of time, and as long as that stock loses to the S&P, your score will reflect that in a positive way. If you try to short stocks in the real investing world, you usually have margin requirement that may be hard to meet, the proceeds from the sell are held aside, plus most brokerages also require a certain percentage of the value of the stock to be held aside. You can lose seriously if you do not have a high level of sophistication and know-how. You can be put into a call if the stock rises too much at which point, you would either need to deposit more money, or the brokerages margin group will sell some of your other stocks positions to cover the call.
CAPS is NOT the venue for using or learning about shorting or the benefits of betting against stocks to gain score and postion here at CAPS. Regardless, CAPS rewards players for using a sort of super-liberal shorting style here, where shorting is a pure fantasy without any of the real-world impact. The conundrum with CAPS is that it teaches many bad habits and ideas while also providing us with access to very useful information and somewhat educational material.
To drive my point home, I can sum it all up with one sentence:
I AM NOT AWARE OF A SINGLE MOTLEY FOOL SERVICE WHICH USES OR TEACHES SHORTING.
So why is shorting instrumental for attaining ratings and scores here at CAPS?