Short Selling- Tim's Trading Challenge

How Stock Message Boards Help You Find Great Shorts

Written by Timothy Sykes

Updated 2/2/2021 2 min read

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Remember my post from the other day where I mocked Red Chip & Charles Payne’s conference, deciding to view every single one of the presenting companies as potential shorts due to what I think about both Charles Payne & Red Chip.

After all, this counter-intuitive strategy hit some giant home runs the last time I featured 64 companies presenting at a microcap conference nailing shorts in Medifast, Inc. (MED), CrowdGather Inc. (CRWG) and Zagg Inc. (ZAGG), all of which dropped 50%+, each having some very sketchy news.

But the biggest winner by far last conference around was calling a short in Electronic Game Card, Inc. (EGMI) which despite being loved by a stock promoter who also considers himself an investor, was halted by the SEC and the stock dropped 90%+…and it was noteworthy that the EGMI message boards ranted and raved about how ridiculous it was that I would their treasured company on a potential short list (even though it was just one of 64).

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Well, this list of potential shorts around, only the fine folks invested in Telestone Technologies Corporation (TSTC) were really angered by my list, check out this comment:

are you nuts timmy?
you think TSTC is a short?
that Payne dude is a whacko true but to say TSTC is a short, requires big balls
I’d love to see you short it…right before earnings…when the company has said repeatedly it’s 4th q is gonna be equal to the first three qs combined…

I sincerely hope that your readers do not take your comments seriously, otherwise they may lose their shirts. Judging from today’s market action, those who shorted TSTC/CHGS/LPIH already did.

Check out how the company did yesterday after reporting subpar earnings:

Granted I haven’t shorted ANY of these companies, they are all just potential shorts…it’s far more interesting to see who comes out of the wood work when I post these harmless articles…methinks I will short the stock of the next message board that complains loudly. Get it?

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity.

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”