How To Find A Short | Short Selling Tells | Zer0es TV | Summary and Q&A

TL;DR

A short-selling analyst reveals how companies hide the negatives of their products and management and highlights the importance of considering both positives and negatives before investing in a company.

Key Insights

• 🙂 Company CEOs often focus on presenting their products in the best possible light, hiding the negatives and only emphasizing the positives.
• 💄 A comprehensive analysis of a company's product is necessary before making investment decisions, considering both positives and negatives.
• ☠️ Short-selling can be challenging due to high borrow rates, but it is essential to understand the potential drawbacks of an investment.

Transcript

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Questions & Answers

Q: What are some red flags that the analyst looks for in companies before shorting their stocks?

The analyst looks for situations where management fails to explain their product well enough and only focuses on the positives, disregarding the downsides. They also investigate companies that hide crucial information, such as the aforementioned pilot test by rap technologies.

Q: How does the analyst approach short-selling companies?

The analyst aims to provide a comprehensive and accurate picture of a company's product, highlighting both its positives and negatives. By exposing faulty products and management practices, they ensure investors have a complete understanding before making investment decisions.

Q: What made the analyst consider shorting the discussed company?

The company had a strange business model and its stock price had risen significantly compared to its competitors, despite not having a competitive advantage in gaining new customers. These factors, along with the hype around remote work tools, led the analyst to believe the stock was overvalued.

Q: What could cause the analyzed company's stock to fall?

The hype around remote work tools and virtual reality may subside, causing the company's stock to deflate. Additionally, if the sector the company operates in slows down, the high-flying stock could crash.

Summary & Key Takeaways

• The analyst exposes companies that hide the downsides of their products and only focus on the positives, emphasizing the importance of considering all aspects before investing.

• They discuss a specific case of rap technologies, revealing how the company failed to disclose a pilot test that showed their product's inefficiency, leading to a significant drop in their stock price.

• The analyst challenges CEOs who try to present their products in the best light possible, advocating for a comprehensive analysis that includes both positives and negatives.