The young trader must have known he would ruffle some feathers when he posted to the 56,300 members of Facebook page ASX Stock Tips Group: “How the people who talked sh-t on me shorting ZIP feel now?”
Angel Zhong, a senior lecturer at RMIT University whose research specialties include retail investor trading trends, says Google search data shows that “CFDs”, “short” sales and “options” received more than a 50 per cent increase in discussion on wildly popular Reddit forum ASX_Bets this year. “The reality is that when the markets are hyperinflated as they have been through this epic bull run, downside is inevitable. Any retail investor who recognises this and realises they can profit from it is simply becoming a better trader,” says one of the group’s other moderators, Taken82. The group’s third moderator, McF---ing, says shorting is an integral part of price discovery.
North uses CFDs to bet on the share price of a stock falling but he’s alive to the risks of these products which allow investors to magnify their bets by up to 20 times the actual value. Using CFDs to short stocks was particularly popular during the global financial crisis in 2008 and 2009 when the market rout caused retail and professional investors to look for ways to make money off the market bloodbath.
“And those are people who are really looking to mostly protect their portfolios against downside, well basically against further downside.”Credit:CFD providers also note that the rate of investment in short positions, while growing compared to two years earlier, is also a lot smaller than those clients who look to place long punts on share price movements.
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