Bigworld, With shorting, I think there are several 'high percentage' ways to go (see below). But going long and then waiting patiently for a '4th Turning' event (which might happen once every 50 years), this is a recipe for big losses since the odds say that the 'big event' doesn't happen for some time, possibly years. But while you're sitting there short, the market slowly returns to its historic uptrend, while your losses steadily mount. A better shorting strategy for a big collapse is ---> when the big event does finally hit, jump in short during the mayhem and quickly grab some profits as they appear. You won't be short the entire event, but still make good profits quickly, and with minimized risk.
Some traditional shorting strategies -
1) Scalp short - find a severely overbought stock or index (RSI over 80), preferably one that has lousy fundamentals but is up on some hype or a fluke, and wait for the move to run out of gas, falter, start to weaken, and then pile in with a short and grab the profits as the air comes out.
2) Established downtrend - find a doggy stock or sector in an established / ongoing downtrend that hasn't begun a bottoming process yet. Enter the short and ride the stock down, cover as profits build up or if the stock starts to firm up.
3) Chart patterns - find a doggy stock in a descending triangle formation, wait for the breakdown at key support (bottom of the triangle) and then go short. Lots of people do this, so everyone piles in once support is clearly broken. Some will wait to see if there is a re-test of the broken support and only go short after the re-test has failed.
Just a few ideas, but plenty of ways to make money shorting that don't require a once in a lifetime doomsday collapse. The danger with being short in anticipation of the doomsday collapse is the extended waiting time required. A 4th turning collapse has a much lower probability of happening at any given time, compared to the market returning to its historic uptrend. So the odds are stacked against the 'wait for the big collapse' strategy. If the timeframe is 10 or 20 years, then the collapse odds are much better, but while you wait the historic uptrend will almost certainly reassert itself numerous times.
Fwiw, I had a few short ideas over the years. Virgin Galactic (SPCE) seemed like an obvious 'disaster in the making', and I had them on my watch list for several years, knowing that just one launch failure (inevitable) could be the end of Branson's space hobby. Seemed like a no-brainer, and I see the stock has been clobbered, though I haven't followed the details of what actually brought it down. But --> bored, trouser stain billionaire meets expensive ultra dangerous hobby, and a bad outcome seemed inevitable. Luckily I don't think anyone has been killed in one of his space contraptions yet, but I guess that's inevitable with Musk, Bezos, and others in the 'space tourism' race.
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AI
