Cooking the Books podcast: should DIY investors try shorting the market?

Each week BusinessDesk and the NZ Herald's Cooking the Books podcast tackles a different money problem. Today, it's the risks and rewards of shorting the market. Hosted by Frances Cook.

There's a saying in the investing world, that you should never waste a good crisis. 

Another classic is that the best time to invest is when there's blood on the streets. 

Behind both of these is the idea that when most people are feeling fearful, there are still opportunities around for the bold, who can zig while others are zagging and get the financial rewards. 

One of these tactics is shorting. 

Normal share market investing relies on you putting money into businesses that you think will do well, and then getting a share of the profits if they do. 

But if you are short, the idea is you're betting against businesses that you think will do badly, and if they do indeed have a bad run, you'll get a profit that way. 

Retail investors, that's the little guys like you and me, have been dabbling in shorting recently. 

Investment platform Stake let me have a peek at the trends for their investors, and the top results were very interesting. 

The top favourite stock is Tesla, which has been a fan favourite for a while. 

But the next two speak volumes. 

One is the SQQQ, an exchange-traded fund (ETF) that shorts the Nasdaq, essentially betting against digital and technology companies. 

The next is the TQQQ, an ETF fund that invests in the Nasdaq, essentially a vote of confidence in digital and technology companies. 

Clearly, investors are divided on what they think the future holds. 

So, let's dive into this fascinating issue, asking whether you should give shorting a go yourself, and explaining how it all works. 

For the latest podcast, I talked to Eliot Hastie from Stake.

For the interview, listen to the podcast here.

If you have a question about this podcast or a question you'd like answered in the next one, come and talk to me about it. I'm on Facebook here, Instagram here, and Twitter here.

Listen to the full interview on the Cooking the Books podcast. You can subscribe on iHeartRadio, Apple Podcasts, or Spotify.