My only claim was that to profit from shorting it you need to not just be right that it is going to go down, but be able to tolerate the volatility in the interim.
That's a claim about the stock market, how do you enact it?
Note it is not a claim that volatility is definitely going to be high.
My point is, any claim about what is going to happen is implicitly weighing that information higher over the background. So if one thinks it's worth sharing, then they're claiming insight that they could be staking on.
I think in your claim that is the "tolerate the volatility in the interim" part. Stating this implies that you think that the volatility is going to be higher than the market expects (as otherwise the statement wouldn't contain new information, i.e. it wouldn't be worth stating) so that means you should be willing to take a straddle position to profit from this assumed volatility, as long as the costs associated with assuming such a position are less than the expected profit. If this isn't true, then you may want to aeconsider whether you actually believe that the volatility is going to be high enough to be worth considering.
Now I suppose there are further meta levels, where one can ask and advise to consider the possibility that volatility might be high, even if one doesn't actually regard the chance of volatility to be high themselves. But for that to be a true neutral claim, one should also ask to consider the chance of unexpectedly low probability. So to say "before you short, consider that volatility might be high" is itself a pro-volatility claim, mildly disguised as a hypothetical.
I hope I'm not coming off as too contentious. My principal point is this: any statement reflects underlying sentiments about what's expected to happen, made because those stated expectations deviate from what is commonly understood to happen. That is "delta", which can be monetised if large enough.
No, I'm not trying to imply that.
You don't know what the volatility will be in the interim. You can take a view on whether you think it is likely to be higher or lower than the rest of the market expects but you don't know.
My claim was as simple as "making money shorting requires you not just to be right that it will eventually go down, but that you also tolerate the volatility in the interim". Whatever that volatility may be.
That claim can be true without implying any profitable trade.
The fact that the claim is true isn't evidence that the price will eventually go down.
I don't think either of us really misunderstand each other at the object level, we're just arguing pedantically about the precise statements we've made.
> My principal point is this: any statement reflects underlying sentiments about what's expected to happen
This is a statement about the stock market, how do I trade on this?
I think I agree. And it indeed takes one to know one ;) That said, I wish to keep going for a bit at the least!
> My principal point is that it is possible to make statements about a system that are generally true without taking any view at all on the specific future states of that system.
So from a purely logical point I agree. However, I've found that in most discussions such statements aren't typically made, as participants share points that bring at least some level of new information or surprise into the discussion. And, perhaps as a fault that I should learn out of, I've come to expect this as the default mode of how conversation happens.
Raising points that the point-raiser themselves doesn't think carry any surprise or novel insight sounds strange to me. To construct a contrived programmer-centric analogy, it's a bit like including lines like `if my_boolean != true || my_boolean != false { panic!("my_boolean isn't true or false!"); }` in programs. It's not technically _wrong_ to do so, but it doesn't serve any point and lines like that are typically removed because they're redundant.
I suppose "redundancy" is the key term here. If you condition investment on (paraphrasing) "also tolerating the volatility in the interim", without intending that as a statement about volatility being particularly important over the period, that begs the question why was volatility as a point raised instead of, for example, opportunity costs or importance of a good brokerage or cons of dealing with plain stocks over more tax-efficient investments. And so, choosing between "this person has happened to include redundant if-statements around their booleans and is aware of their redundancy" vs "this person has included extra checks around their booleans believing in their purpose", I opt for the latter interpretation.
And so while I concede that I am making an assumption over the literal interpretation, I also believe that it's warranted. My claim is: a person wouldn't make statements about a topic, if they themselves didn't believe those statements to be worth raising, where worth is measured by the personally perceived insightfulness of those statements.
Although, thinking out loud a bit here, I suppose that statements can also be made for other perceived sources of worth, such as pointing out non-obvious behaviours for sake of informing or educating. But even then the point-raiser believes that the non-obvious behaviour is worth knowing about, i.e. it has some real effect when accounted for by a person who wasn't aware of that. In this volatility example, I think that would equate an underlying belief of "volatility negatively affecting whether short positions are worth taking", outside of the positively-affecting "required" amount of volatility resulting from the price dropping and the short position becoming profitable.
Regading this,
> > My principal point is this: any statement reflects underlying sentiments about what's expected to happen
> This is a statement about the stock market, how do I trade on this?
I suppose one could trade this (albeit somewhat contrivedly) by looking at what the people "in the know" make statements about vs. what they don't. As an example, a CEO making a press release about "We're increasing our usage of AI" is making an overt statement statement about the company's AI usage changing, and a covert statement about they themselves believing that communicating about increasing AI usage is a good thing. Depending on what slide of the keynote the line stands, it (in my mind, per my own perception of the rate of current adoption) reads as a stronger or weaker signal that the company is a technological laggard because the CEO thinks that communicating "yesterday's news" is still worth it.
How tradeable is that by itself? Likely not at all. As a component of analysis? Maybe it's worth something.
Reminds me when HN was saying NVIDIA is a good short 3 years ago, supposedly it was "in a bubble", because it's stock prices was as if it had 10x the revenue it had in back then. Plot twist: today NVIDIA revenue is 10x the revenue from 2023, so it turns out the stock was priced exactly right back then, because the stock market is forward looking.
The market being rational doesn't mean it's going to follow your expectation.
What are you talking about?
the changes started happening in July, look to the monthly numbers, and how they are being more vague