I’ve been building a long-term portfolio with the boring basics like VOO, IWC, SGOV, and AVUV. That’s the core I plan on holding and compounding over time.
On the side, I’ve been experimenting with shorting stocks on paper trade. I usually look at recent IPOs or companies that seem way overvalued. A few of my recent shorts, like HOUR and OPEN, actually performed really well and were up nearly 30 percent. Other names I’ve been watching include ANPA and FMFC.
What I keep noticing is how often companies trade at crazy valuations, sometimes with P/E ratios in the hundreds or even over a thousand. When you run the numbers, these companies would have to multiply their profits 20 or 30 times just to justify where they’re trading, yet people keep buying them because they’re in hot sectors like AI or aerospace and defense.
I’m wondering if it’s a bad idea to keep looking for short candidates in sectors like that, even if the sector itself is strong. I understand that hype and momentum can keep things going longer than expected, but it feels like at some point the fundamentals have to matter.
Does anyone here actively short in situations like this, or do you just stick to your long-term core and ignore the noise?