Continuously shorting IT stocks overnight and buying back at market open | Hacker News Reader

Continuously shorting IT stocks overnight and buying back at market open

blog.abctaylor.com

46 pointsarcza21 comments

While I'm not suggesting it's a good strategy to short continuously, unless you short a hard to borrow stock, the borrowing fee for shorting a stock is typically much lower (as in 0.25% yearly) than the interest you can get on the cash you get to hold after short sell a stock (should be 4.5%-5% with the current fed funds rate).

So, other than the transactions fee, shorting a stock that doesn't move is a way to arbitrage the spread between the Fed funds rate (minus 0.5% or so depending on your broker) and the stock borrowing rate.

Yep. As a retail guy though, I get no rebate however on that cash. I just pay the 25bps pa AFAICT.

Not sure about other brokers but with IBKR I get paid interest on shorted stock. If you don't your borrowing fees are essentially higher than they could be.

This whole thread looks like nonsense to everyone outside the weird finance bubble

I wonder if the author meant to pick Akamai (AKAM), not Alkami (ALKT). The latter is an odd choice among the rest of the picks. I suspect they have mixed up the names.

I rushed my post and skipped QA, went straight to production. (fixed, thanks)

Thanks for the write up. There is a typo in your third thesis bullet, I believe “stratefy” should be “strategy”.

Also - I’m curious as to the outcome if you were to exclude AMZN and MSFT. I think their size and broad array of product offerings skews the outcome for this analysis

Yeah you're right. Although, how bad would "S3 is deleted worldwide" be? Or "RDS is down for the foreseeable future"? So IDK... The other problem with them is how big they are, so you can't take proportional weights in them, which messes with risk a bit. I think this is a crap strategy but an interesting idea. As others said, the sentiment scanning probably has a better shot, and you pay the huge spread trading outside RTH.

> Should we trade telcos? > Nope, BGP is a great protocol used in the Internet; it would be so difficult for a single name stock to take down the global Internet.

hahaha hahahahahaha hahahaha hahahahahahahahahah

this is a joke, right?

https://www.kentik.com/blog/a-brief-history-of-the-internets...

There’s a decent amount of “good news overnight” because of time zones.

Samsung release earnings with higher than expected phone demand, Apple will drop. Apple releases higher device projections, TMC will rise. Nokia releases new projections, people say “oh yeah, Nokia is a thing”.

What about limiting your exposure to companies that operate in the same time zone as your stock exchange?

Only if their suppliers and competitors are in the same time zone too.

A better strategy might be to monitor social media to try and gain intel ahead of the market, but it's a arduous task, even with LLMs.

Especially since everyone else is doing exactly the same. The entire point of social media is that it's not a secret.

What if instead of that we use intel from insiders and buy stocks using that!

Oh wait, that's illegal when you're not a billionaire.

Don't forget you can do it when you're an elected representative too!

Except in very rare cases, congress people have no non-public material information.

Nancy Pelosi has as much clue as you about NVDAs prospects. Nancy makes more money than an average HN reader because she isn't too smart to worry about small risks that HN reader gets tripped up.

Every one knew about Covid coming. Worse, people who sold off during covid are worse off than the ones who just held it.

Indeed, everyone believes congresspeople have some special exception to insider trading rules. In fact, they are subject to the same insider trading rules as everyone else, and the conduct they engage in simply doesn’t meet the (unintuitive) legal definition of insider trading.

Some efforts to impose a different, more expansive definition on congresspeople have failed, which might be the source of that misconception.

But the whole point is that it's "passive" and trading is closed off-hours.

Stocks can tick upwards (between close and open) and there may be more up days than down days destroying your strategy

Correct but respectfully I think you didn't read the post fully. I mentioned within I'd hedge by buying an equal dollar amount of NDX futures which makes it a bit more beta neutral. If those stocks rise, so does the NDX, and my losses on the shorts are offset. But the whole thing won't work anyways due to high trading costs. Unless somehow you can make markets very well at huge scale.

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