Hacker News Reader

Comment by dweez | Hacker News Reader

This is a slightly tongue-in-cheek way of saying that if you believe a security is severely mispriced then there is a straightforward way to express that opinion.

View on HN

Shorting is really not that straightforward. It is a avery advanced topic because it mandates the use of leverage. Many (most) investors are long-only, especially the ones being taken advantage of here.

> especially the ones being taken advantage of here.

This is a great argument why buying an index is a poor choice for a long term investor. You can avoid a great deal of shenanigans by randomly purchasing stocks and holding them for 50 years. Even a 0.02% annual fee costs you 1% of your long term returns over that timescale.

But there’s tradeoffs to everything.

Index investing is a great choice for a long term investor who cares about simplicity, which should be the vast majority of them. Actually the best thing about holding individual stocks is probably the increased opportunities for TLH, but the nightmare of holding and managing hundreds of securities in your account is very seldom worth what you save on fees or deferred taxes.

You still owe the taxes on dividends generated by an index fund that automatically reinvests dividends. There’s ways around this like a 401k, but you can also own individual stocks inside a 401k or rollover to an account that lets you do so.

I don't know how that's a response to what I wrote. I'm not saying that an ETF is more tax efficient, although it is more tax efficient than a mutual fund. If you are worried about the tax drag of dividends then there are ETFs that seek to track spx, but without receiving dividends, by selling and rebuying around ex div dates. They're not established enough to trust with a lot of money, imo, but maybe it will become more normal one day.

https://www.proshares.com/our-etfs/leveraged-and-inverse/psq

This is not financial advise.

Reply on news.ycombinator.com