Topic: Gauging interest: PuppyBear bearish investment fund (Read 2502 times)

18 months and counting!


The problem with your theory is: if you had the money available to cover this bet it would make sense for you to buy back your own shares (or, if your normal business allows, expend more capital to expand it at the same ROI level). If you aren't buying back your shares it's likely you don't have the money (it's also possible you're not thinking things through, obviously).

If you don't have the money available you'd be writing what are essentially naked options, which you (in spite of what you might think) aren't either qualified (intellectually) or prepared (financially) to do. I know, I know, it's easy to think you're a big kahuna in BTC finance based on forum circlejerking. So thought kludge, so thought Rosenfeld, so thought all sorts of people who are now selling their cars & wives to cover for their inept dealings.

As others, as well as I, have pointed out to you: buying puts from the underlying owner makes zero sense. If you default they're useless and if you don't default they're useless.

This is a good explanation.  Me willing to sell PUT options is only a bet that the share price is currently undervalued, and it's a bet I would be making with my own funds.  The only effect it should have on shareholders, is to inspire confidence that I'm willing to bet the share price will go up.

This is a great idea.  I too suspect that the GLBSE has overall been a huge transfer of wealth from investors to asset issuers and scammers.

When you short an asset (or sell it short), you sell an asset that you do not own, but that you borrowed from someone else.

Assume you have a share in company X, and I think the market price for that share will drop, and you think it wont;  I could ask you to lend it to me for some time; we agree on minimum and maximum terms, I pay you a fee it, and then I can sell the share at the current high price, and some time later, I will buy it back (at a lower price hopefully) and return the share to you. Its simply a bet the price will fall. As the short seller, my potential profit is the difference between sell and buy price (minus your fees) and it can never be bigger than the asset value, ie when the price would drop to zero and I could buy it back for free.  My risk however, when unhedged is in theory unlimited, since the price of the asset could go arbitrarily high.

A put option works similarly, but its a contract between buyer and seller that doesnt necessarily involve a transfer of the asset. There is also a difference in risk and potential profits; the risk to the buyer of the put option (who bets on a price drop) is limited to the premium paid to the seller. If the buyer loses his bet, and the price does not drop below the strike price, his option becomes worthless, but thats it. His potential profit is limited to the difference between current price and the agreed strike price.

eck, I see deprived posted while I typed..

If OGNasty entered into either selling a short OR a PUT option then it would have no effect on number of outstanding shares.

Easiest way to ythink of it is that it's a bet (below is very simplified) -

OGNasty bets that NASTY shares hold their value, the other side bets that they lose value.
It's really nothing more than that.

Only risk to shareholders is that someone shorts the share then tries to talk the price down.  But if there's nothing wrong with the share then:

a)  It probably won't work,
b)  IF it does drop (and there's nothing wrong) then those who aren't misled get to buy more for cheap.

And there's no need for shorters to try to talk down targets anyway - why try to talk down a decent share when there's plenty of bad ones you can short and let collapse on their own without any need for interference?

So if it happens there's no real issue for shareholders - and, in any event, it's not gonna happen anyway.  OGNasty's post was more of an "I dare you to bet against me" than an offer he'd have had any expectation of being accepted.

Mr P. sez: Indeed the quote was from this thread, and indeed the comment was mostly humorous.

It's like I was telling OGNasty the other day on IRC:

"I'm new to such things. only ever had a broker manage my stuff prior to bitcoin"

As such, I don't understand this "short" thingy? All I saw here in the post was:

"... something something something I'll sell for cheap ..."

Which I might have misunderstood?

And by diluting shares, I meant the value / dividends would be less if there are more outstanding shares because of this sale. Currently only about 7000 outstanding shares but if even another 3000 were sold there would be less dividend payment per share. Nothing more was meant by "dilution" than the common use.

That's why I asked about time-zone - as one pretty obvious interpretation of Mirceau's irc chat was that he was intentionally quoting from this thread, then his next line was commenting (in a joky fashion) that you were stealing his idea.

I don't take anything usagi says at face value.  I was also accused by it of being an account made on mirceau's behalf in early august this year.  Despite the FACT that my account wasn't even created this year - let alone in the week that it alleged.

troll topic of the year

Welcome to the party.

Deprived already made most of the points I wanted to make. But let me add;  I would avoid betting on the short term, this market isnt always very rational or quick to understand, and low liquidity could hurt us. More importantly, right now, I would be wary of shorting (or buying) mining bonds or shares in general. The asic switch is difficult to predict, we dont know how many devices will be shipped, when they will be shipped, who will get them first and how long it will take for the others to receive them. Its even more difficult to predict how investors will react on what I expect will be a brief but very substantial gain in dividends (especially for those who get them early), to be followed by very sharp and prolonged decline towards nothingness. Most likely this will create great shorting opportunities at some point, but I wouldnt start the bet today, I would rather wait until these companies are mining with asics and see if enough investors get fooled by the apparent spectacular rise in perceived profitability and/or dividend payments.

One last thing, not directed to you in particular, but the fact the vast majority of assets on GLBSE are IMO not worth buying, shouldnt be viewed as criticism on all the issuers. Its not (always) their fault if investors will buy the "least worst" at whatever the current price,  or hang on to shares that are ridiculously overpriced.

LOL, its micrea who just copy/pasted it from my post. I dont even use IRC.

As a shareholder, all I have to say is:

thefuq are you talking about?

What will this do for the value / further dilution of my shares, etc.

Sure hope you don't plan to do something like this without first putting it up to a vote.

What time-zone are those time-stamps in?  Would be interested to see when that is relative to this (and MP's thread on a similar topic) being made.

Would also be interested to hear what Puppet has to say.

Yeah its a pain when even your own sockpuppets steal your ideas without crediting you isn't it?

-MarkM-

1.  I would never buy a PUT option from the operator of a company because:
   a) There's asymmetrical information in their favour,
   b) If they scam the company they obviously won't honour the put call.

2.  Doubt very much puppet's plan is to short EVERY company - just the worst ones.

3.  Following on from 2., your company is one of the minority on GLBSE that has an A grade in my personal list.  Don't be TOO flattered by that - as I pretty much only day-trade and A grade just means that I believe the price is stable enough within a range that I feel comfortable leaving up bids overnight.  A B grade means I'll trade in it but not leave bids up whilst afk, below that means I won't trade it at all.  There's more securities with ratings below B in my list than As + Bs combined.

In short, yours isn't one of the securities I'd look to short - there's far better targets.

Puppet may, of course, have a different view.

I'd be willing to sell put options on NASTY shares at the IPO price if you were interested in taking a short position.

To Ian:

I don't know if it is realistic, but as for the ideal solution to the ceiling...

It would be best if the asset could be "relisted" under a new IPO. Obviously something special would have to be worked out with GLBSE, but I think that it's in the best interest of your shareholders, yourself, as well as GLBSE if we could engineer an IPO "redo."

If anything occurs to me in the future I'll be sure to post it on your thread.


I wonder, then, if the fund would have to use some sort of exclusion criteria to rule out catching dead assets.

In other words, it will invest in the cream of the crap.

Very interested in this part of your idea.

I didn't study finance back in school (a related field). When I first discovered GLBSE, one thing was obvious - and didn't require a background in finance to realize:

The easiest way to realize a loss of principal would be to buy into a security at IPO or early on. Can anyone hear name a security that trades at or above IPO price? There are probably some on the market, but they seem to be the exception not the rule. Real world IPOs are supposed to generate a return for their investors, yes? At least a few people have talked about changes in IPO structure. It has become obvious, even to someone clueless about finance like myself, that properly designing and deploying the IPO is a make-or-break factor. It's too bad - we will see perfectly good business ventures fail in the future because of ill-designed IPOs!  

This fact is even more obvious for some "genres" of GLBSE securities - I'm looking at you, fixed Mh/s mining bonds. This dead horse has been beaten enough but it's still a good example. We can all agree - mining rewards go down, mining difficulty goes up, hardware value only depreciates. Northern hemisphere miners If I wanted to IPO a mining company today, I feel like I wouldn't be seeking out capital so much as charity.

On to my real point. Does anyone here know about the IPO options available through GLBSE? Because I am not familiar.

Hypothetically, it seems that "PuppyBear" could realize profits through exploiting problematic IPOs. Even with assets that aren't overpriced, are very solvent, and not scams.


I agree with the confidence in Nefario (though it seems like he's cut off from the internet or something). I also think that listing "PB" on GLBSE would be good. Could the fund's trading activity help with solvency on the exchange? I imagine it would, even if not a significant amount.

Cheers

edit: I don't have time to read the whole BAKEWELL thread, but I'm sure some of you already have. It looks like it's relevant to what I was talking about.