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Comment by sam0x17 | Hacker News Reader

My WFH-driven long bet against commercial real estate that I've held since pre-covid times continues to bear fruit

Is there an effective means of shorting commercial real estate available to retail or "small" accredited investors? Seems like an easy bet to take.

>Seems like an easy bet to take.

Well, yeah, you're two years too late.

Prices haven't really fallen yet to my knowledge. There is a lot of resistance to letting prices fall (marking to market), and many commercial real estate deals are multi-year. RTO mandates indicate that larger employers aren't yet willing to give up office work.

IMO I expect to see something give over then next 3 years, with some markets taking longer to correct.

Yes, just short real estate investment trusts for commercial property, write puts (options) against these shares (warning make sure they're covered and not naked), or throw money at many of the ivnerse ETFs out there.

> warning make sure they're covered and not naked

Covered puts wouldn’t be net short. They're net neutral or positive as the puts expire worthless if the price doesn’t drop.

You can hedge your puts by buying some calls to limit the max exposure if the price rises.

Buying puts would be a net short position.

You are betting against the house though and the house always wins, logic be damned. commercial real estate is an over 22 trillion dollar market in the U.S., there is a lot of well lobbied vested interest in not letting that money poof into smoke.

How did you profit from this bet?

shorting or longing?

pun intended

sorry :)

can anyone explain the difference between shorting a stock and the opposite of it, if any? and what both of them mean? ELI5, please.

I've read about it from long back, but have been too lazy or never thought to check out what it meant, since I don't do much share trading.

double sorry.

wikipedia can though investopedia might be a more fun rabbithole for you.

https://www.investopedia.com/terms/s/shortsale.asp

Shorting a stock is like taking out a loan, but when you pay it back, you don't pay it back at the value you started with, but at the new value. So, if you shorted starting at $100, and it's now worth $10, you could keep those $90, and pay back just the $10.

But unlike stock buying, shorting can cause huge damage more the the starting value.

If you short a stock at 100, and it reaches 10, you pay back at 10 and get to keep the remaining 90.

If, however, that stock reaches 300, you have to pay the extra 200 from your pocket.

So shorting is much bigger risk than investing directly in stocks.

That's if you actually borrow the stock & sell it, the old-fashioned way.

There are less risky ways, like buying a put option.

Long: you buy a stock, hold it, later on sell for profit or loss.

Short: you borrow a stock, sell it, hold the money and later on buy the stock back at a lower or higher price you originally sold it for. Then return the stock to the person who lent it to you.

The opposite of shorting is just buying the stock: exchange the market price $X for a share of stock today, sell later for $Y, profit or loss is $Y - $X. You've made money if the stock has gone UP. Since there's no upper bound on the price of a share but the lower bound is $0, you can lose at most your initial outlay $X, but potential gains are uncapped.

Shorting a stock is borrowing the stock: that is, you get a share of stock today (and sell it today for market price $X) but are liable for returning the share of stock at some time in the future (you obtain it from the market at $Y to do so). The profit or loss is thus $X - $Y. Since there's no upper bound on the price of a share but the lower bound is $0, you can gain at most your initial outlay $X if the price goes to zero, but potential losses are uncapped.