Short SPX and go long BRK.b? Equal $$$.
Nah. I don’t short stocks. Too risky for me. While I do expect the SP500 to go down further in this bear market, I can’t predict the timing, nor am I certain enough about the prognostication to bet on it. Maybe we get a 3 month bounce from here and I sure don’t want to be short wondering if/when I get proven right.
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It is not a short but short SPY and concurrently go long BRK.B for the same $$$, for ex you short 355 SPY and go 500 BRK.B long. If BRK.B outperforms SPY you make money, if it underperforms you lose. But you should be able to easily close with certain pre-defined stops. Since you are shorting Index, you are not exposed to single stock shocks like takeover bad earnings, CEO sex scandal etc.
When you short SPY, you have to pay interest on the borrowed shares you sold, right? I have no strong belief about the timing of when SPY will be significantly lower than today. A three month bounce would leave me wondering if/when I might be proven right and I might be sorely tempted to end the pain and close the position. No thanks.
Also, I expect in the short term that BRK will trade with the market down if the market drops, so again, no thanks.
But that’s just me. I’m trying to reduce my inclination to trade, not ramp it up. It tends to hurt me more than it helps.
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