Good article on NFLX

[hyten1]

for me nflx vs amzn

 

i would rather own amzn as a biz

 

both has very high valuation (i guess depends on your definition of high)

[T-bone1]

With all due respect, I thought this was a board dedicated to value investing. I'm glad Harry made money, but I don't think speculating on overvalued stocks and calling it a gamble is a valuable contribution to the discourse. If there is some reason that NFLX is possibly worth this price I would love to hear it.

 

The analyst consensus cash flow per share estimate is $10 for 2011 and $15 for 2012. The cost of content doesn't show up in the income statement, or in cash flow from operations, but it does show up in cashflow from investing activities. They are currently spending about $200 million per year to get content. They have just signed a deal to pay EPIX $200 million per year for the next five years on top of this, and they have yet to renegotiate with STARZ, at what will certainly be a higher rate than what they pay currently. It looks like they will easily be spending $400 million per year on content in 2012, and this number will only rise. This puts free-cash-flow at about $7 per share (using 50MM shares) in 2012 . . . still nothing to shake a stick at (If content cost $500 million, which is likely, it will be only $5 of FCF in 2012).

 

This FCF is largely due to the cash flow benefit they will recieve from lower postage cost as more customers start streaming content. They only have about $4 per share in debt, so I will ignore that, and say that on a market cap basis they are trading at almost 23X 2012 estimated free cash flow . . . and this is two years from now when growth will likely have peaked and a lot of the benefit from lower mailing expense will have been realized. I expect FCF to decline from that point, as NFLX is squeezed out by the players that actually have a foot on the court (content developers, owners of delivery infrastructure, owners of a box in my livingroom). The risk to my thesis is that they use their overvalued stock to buy content, like movie studios (I don't think buying STARZ would help as it creates very little content and they would be back at the door of the studios). This would make the company more durable and less overvalued, but people probably don't want to pay 60X earnings for a movie studio, so the stock price would still fall.

 

If we call the after-tax-gain in book value for FFH free-cash-flow (which it essentially is), and assume it is 15% per year, then 2012 FCF for FFH is $75 USD. This is a good company that will grow for 20 year and its trading for less than 6X 2012 estimated FCF. This is why I think NFLX is overvalued, that and because the FCF yield is about 4% on what I view as a declining asset. When FCF never materializes at NFLX or they have any other hiccup the stock will decline. This is why I'm short. There is no margin of safety for a long "investor" here, and while it has worked out very well, the purpose of my question was to ask why a holder would continue to own the stock at these levels.

 

NFLX has been and is a tremendous company, and have survived predictions of demise from many people smarter than me. However, they were able to do this based on their ownership of the delivery infrastucture and content (DVDs and mailing centers). Going forward there is no reason for the studios, the cable companies, or AMZN, AAPL etc. to let them take a big slice of the pie. AMZN makes a lot of their money from selling DVDs and needs to defend this market. This is why there used to be rumors that AMZN would buy NFLX. This never happened, because without the mailing business, AMZN can build NFLX from scratch for a few hundred million - including subscriber acquisition. This is the value of the "virtual" NFLX business.

 

Bargainman, you make a very good point about shorting growing "story" stocks, and I agree. You give a very good reason to not short the stock regardless of valuation, but I would like to hear a reason for owning the stock. This is not a momentum investing board . . . I don't mean to be rude, but if I wanted to hear someone quote "the gambler" and brag about owning a momentum play that they either don't understand or are not interested in discussing, I would go to a yahoo message board.

 

I shorted more at $165.81 this morning because I think it is overvalued for the reasons above, and because I think this recent move is a huge overreaction to Blockbuster filing chapter 11 (which does not remove them as a competitor if that mattered). I expect higher content costs, lower projected FCF, the STARZ negotiation, the next quarterly report or almost any other catalyst to move the stock price lower as there is no margin of safety. This is why I shorted the stock.

 

Would anyone buy the stock at these prices? why?

[Sea Island]

Myth, what happened to your last post, it disappeared?

[bargainman]

Bargainman, you make a very good point about shorting growing "story" stocks, and I agree. You give a very good reason to not short the stock regardless of valuation, but I would like to hear a reason for owning the stock.

 

Well I'm going to disappoint you, ie I'm not going to answer your question... but here's something else I remember from the strategy slides.  NFLX's lowest monthly sub price is $10.  Ten bucks!  Their model is the lowest cost/lowest producer etc model.  Ie they figure that even if someone has cable at $30-60-100/month, they'll spring for NFLX too since it's so cheap and people get access to the library online.  On top of that, ubiquity was their other key.  There's a NFLX online player for every friggin' device out there...  As such their business has some cushion in a downturn.  That said..  I wouldn't buy NFLX today.. neither would I short it...  Option premiums are probably too high to buy puts too.. 

[Myth465]

Myth, what happened to your last post, it disappeared?

 

Oh sorry bout that. I deleted it. I can see that everyone wants to look at this from a valuation perspective. I think that's the wrong question, unless you have unlimited patience and capital. I can see that T Bone is aware of the momentum and story issues but is more focused on the value. My post didn't add much value and just reiterated the same thing so I deleted it.

 

To sum it up I think T and Watsa are right in the long term, but it may be painful in the short term should we March up to 12000 and NFLX has a good quarter or 2. Judging by the O&G post and his comments above T Bone has his research ducks in a row. I can take a 10% position going to 5% or even 0% on the count of market sentiment but wouldn't be able to stand a position growing overtime slowly dominating my portfolio. It reminds me of Barton Briggs with his oil short, and the great Keynes quote about markets and solvency.

[fuluvu]

Warren Buffett never shots stocks. He said  that he has never been wrong on the overvaluation of a stock, but problem for shot is that it is difficult to get the timing right.

 

Pabrai has similar comment.

 

I am not smarter than Buffett and I never shot stocks.

 

That's all I want to add to this topic.

[Guest HarryLong]

T-Bone, just try to remember that there are two sides to every story, and the guy on the other side of the investment or trade might not be as dumb as you think. I always respect my competitors enough not to underestimate them. You should too.

 

Since you don't seem to understand the gestation of my position, I will post what I wrote on the Ebix thread to give you context. In the end, my reasons don't matter.

 

What's the big picture? The longs think NFLX can sign up millions more subscribers. If they're right, the stock is cheap. The shorts think NFLX can't sign up more subscribers. If they're right, the stock is dear. Right now, the market agrees with the longs. Everything else is noise. Whoever is right in the long run makes the money. That's what makes a market. And for heaven's sake, don't lecture me on gambling. Gambling is holding a short as it moves against you by 40%. Congrads on receiving precisely the wrong message from the pearls I'm dropping you. Maybe I should apologize for suggesting risk control, since it's not a "valuable contribution to the discourse". I'm not the one who's been short NFLX. Try some modesty about your short idea. The guy on the other side of the investment or trade might not be as dumb as you think.

 

Don't stoop to deigning to tell others that you are the arbiter of what is and isn't value investing. It's called the value investor's "haven". A haven doesn't mean your ideas are agreed with all the time. It means they are challenged. When they're challenged, don't start the childish, "you're not a real value investor" rant. We're here to make money, not decide on dogma, ideology, and who is a true "believer" or "adherent." Heterodoxy is what makes a market.

 

If you want to short NFLX, short it. You're a big boy, and you can find your own way home. Something tells me however, that you need people to agree with you, which is why you post longwinded arguments that miss the point. You clearly find it unbelievable that Netflix could sign up millions more subscribers. That's OK. There's nothing wrong with that. But people who believe they can, given Netflix's excellent track record of doing just that, are not dumb, speculators, or fake value investors.

 

[From the Ebix thread]

 

Gentlemen,

 

I'm up over 170% on the position, so I am not arguing that at the current time the valuation is justified or unjustified (it may very well be fairly valued with reasonable expectations). For tax reasons, if the the company continues to grow rapidly and the stock continues to rise, it behooves me to hold it, but I will turn on a dime if one or both conditions change.

 

From a big picture point of view, it's not outrageous that a company which supplies much of the media needs for tens of millions of people has a valuation of $8 billion. If they can duplicate their U.S. success in a variety of countries, it might very well be cheap. Rather than have brilliant theories, it is important to react properly as events unfold. You own a company like this to make a bundle of money as it grows, expands to other countries, drives down costs with their Akamai deal, finds new markets, etc. If it stops growing rapidly, you sell your stock. It's dirt simple.

 

I think it's important not to get parochial. I have a very cheap cost basis, they're expanding into Canada, the stock is popping, they have first class management, and their former gorilla competitor blockbuster may be filing for bankruptcy, but at the very least, is mortally wounded.

 

It's a winner takes all world we're entering. The winner takes all. The losers don't even get the scraps. My job is to find the winners. I found NFLX, and in retrospect, got it at a shrewd price. For now, I'm holding it. As Keynes said, "When the facts change, I change my mind. What do you do, Sir?"

 

With that said, I love taking profits as much as the next guy. If the facts change, or I change my mind, I can turn on a dime. I'm here to make money, not to worship at the altar of one investing ideology or another.

 

 

With all due respect, I thought this was a board dedicated to value investing. I'm glad Harry made money, but I don't think speculating on overvalued stocks and calling it a gamble is a valuable contribution to the discourse. If there is some reason that NFLX is possibly worth this price I would love to hear it.

 

The analyst consensus cash flow per share estimate is $10 for 2011 and $15 for 2012. The cost of content doesn't show up in the income statement, or in cash flow from operations, but it does show up in cashflow from investing activities. They are currently spending about $200 million per year to get content. They have just signed a deal to pay EPIX $200 million per year for the next five years on top of this, and they have yet to renegotiate with STARZ, at what will certainly be a higher rate than what they pay currently. It looks like they will easily be spending $400 million per year on content in 2012, and this number will only rise. This puts free-cash-flow at about $7 per share (using 50MM shares) in 2012 . . . still nothing to shake a stick at (If content cost $500 million, which is likely, it will be only $5 of FCF in 2012).

 

This FCF is largely due to the cash flow benefit they will recieve from lower postage cost as more customers start streaming content. They only have about $4 per share in debt, so I will ignore that, and say that on a market cap basis they are trading at almost 23X 2012 estimated free cash flow . . . and this is two years from now when growth will likely have peaked and a lot of the benefit from lower mailing expense will have been realized. I expect FCF to decline from that point, as NFLX is squeezed out by the players that actually have a foot on the court (content developers, owners of delivery infrastructure, owners of a box in my livingroom). The risk to my thesis is that they use their overvalued stock to buy content, like movie studios (I don't think buying STARZ would help as it creates very little content and they would be back at the door of the studios). This would make the company more durable and less overvalued, but people probably don't want to pay 60X earnings for a movie studio, so the stock price would still fall.

 

If we call the after-tax-gain in book value for FFH free-cash-flow (which it essentially is), and assume it is 15% per year, then 2012 FCF for FFH is $75 USD. This is a good company that will grow for 20 year and its trading for less than 6X 2012 estimated FCF. This is why I think NFLX is overvalued, that and because the FCF yield is about 4% on what I view as a declining asset. When FCF never materializes at NFLX or they have any other hiccup the stock will decline. This is why I'm short. There is no margin of safety for a long "investor" here, and while it has worked out very well, the purpose of my question was to ask why a holder would continue to own the stock at these levels.

 

NFLX has been and is a tremendous company, and have survived predictions of demise from many people smarter than me. However, they were able to do this based on their ownership of the delivery infrastucture and content (DVDs and mailing centers). Going forward there is no reason for the studios, the cable companies, or AMZN, AAPL etc. to let them take a big slice of the pie. AMZN makes a lot of their money from selling DVDs and needs to defend this market. This is why there used to be rumors that AMZN would buy NFLX. This never happened, because without the mailing business, AMZN can build NFLX from scratch for a few hundred million - including subscriber acquisition. This is the value of the "virtual" NFLX business.

 

Bargainman, you make a very good point about shorting growing "story" stocks, and I agree. You give a very good reason to not short the stock regardless of valuation, but I would like to hear a reason for owning the stock. This is not a momentum investing board . . . I don't mean to be rude, but if I wanted to hear someone quote "the gambler" and brag about owning a momentum play that they either don't understand or are not interested in discussing, I would go to a yahoo message board.

 

I shorted more at $165.81 this morning because I think it is overvalued for the reasons above, and because I think this recent move is a huge overreaction to Blockbuster filing chapter 11 (which does not remove them as a competitor if that mattered). I expect higher content costs, lower projected FCF, the STARZ negotiation, the next quarterly report or almost any other catalyst to move the stock price lower as there is no margin of safety. This is why I shorted the stock.

 

Would anyone buy the stock at these prices? why?

[manualofideas]

Netflix insiders have had automatic sale programs in place since the $30s.  I think that says something.

[Guest HarryLong]

And I do want to apologize to T-bone for making 10% on NFLX this week.

 

Clearly, anyone who disagrees with T-bone is a fool, so I really didn't deserve to make the money. Thanks so much for the lecture. I should probably feel just awful, since my idea clearly didn't pass muster with you   ;D

 

It's always great to find an expert like T-bone who can put people in their place with brilliant analysis, and even better timing!  ;D

 

Just kidding T-bone, you could always be right, and I could be wrong. That's what makes a market. Just because we disagree, it doesn't make me a gambler. Everything we experience is a chance to grow. I hope you take my joking in that spirit, but I am also kind of serious.

[T-bone1]

Harry, I realize there are two sides to every argument, that's why I was asking for your side. I didn't call you a gambler or lecture you on gambling, I said I would rather hear your valuation argument, rather than have you quote the song, "the gambler".

 

My short thesis, if you read it, is not that the company won't sign up millions more subscribers . ..  I'm sure they will. I think they still won't make any money due to content and delivery costs when they do. Do you have a response to this argument?

 

I am not trying to be confrontational. You wrote: "in the end, my reasons don't matter" . . . but that's precisely what I'm interested in, your reasons. The purpose of this board is to have discourse and have people discuss different sides of an argument to help us all make better investments and be better investors. I never said you were dumb, and I have congratulated you on what has no doubt been a very succesful position for you. I am just interested in why I might be wrong.

 

You wrote, "Don't stoop to deigning to tell others that you are the arbiter of what is and isn't value investing." . .  I didn't, I just said that I'd like to discuss value, not how much your position is up.

 

I have gone through and read your blog and your "valuation work" on EBIX as well as your very impressive "more subscribers" valuation of NFLX . . . I have decided you are a windbag who has no idea what's he is talking about. So really I would be interested in discussing the long thesis with some other NFLX owner who actually has a thesis.

 

I will tell you what is and is not value investing: It is discussing the value of a company rather than the movement of a stock price. That is all, and this board is the place for it.

 

I think you add nothing to this board because you don't discuss valuation. Your EBIX piece, which you were so offended we didn't all discuss with you, had no valuation whatsoever. EBIX is a software company that has grown through acquisitions. In an article where you apparently interviewed yourself you wrote:

 

"Can you talk about valuation? How does valuation compare to competitors?

 

I would estimate that they will generate somewhere between $40-$55 million in free cash flow next year. (It's better to be roughly right than precisely wrong.)

 

That puts the stock at roughly 10-14 times free cash flow. The valuation is ridiculously low. I'm only doing this interview because I think it's one of the great inefficiencies in this market.

 

There are really only two views you can take on this stock. Either it's one of the best growth stories in the U.S., or the numbers are too good to be true. I've visited Robin Raina at his headquarters in Atlanta, and I think he is one of the most rational people I have ever met. I like him, and I trust him. My money is staked on the notion that the numbers are very real, that he is an excellent manager, and that this company could grow for years.

 

You're getting a Phil Fisher stock at a Benjamin Graham price. That's the name of the game. I would encourage the institutions to make the trek to Atlanta and to sit down with Robin. I think they will come away impressed."

 

There is no valuation there Harry. Do you have a discounted cash flow model? An idea of whether they might have a moat or the value and metrics where similar companies trade? I congratulate you on being a succesful growth and momentum investor. While everyone else has been polite enough to ignore you I would prefer to see this board, which is a great resource for value investors, not be polluted by ideas without any analysis by someone with no interest in discussing the value of a company.

 

I apologize if I have somehow gotten you all wrong, but I doubt it.

 

[Guest Bronco]

Harry, everyone loves to hate the villain...perhaps you can play that role here.  IMO, it keeps things interesting.  Nevertheless, just don't take your ball and go home like Rick v.

 

You and I have different investment styles, but that's ok.  We can still both make money.  And I don't want a message board where everyone agrees...I like these boards for idea generation.

 

Everyone have a good weekend.

[Guest HarryLong]

T-bone, you clearly haven't read any of my previous posts. As Tariq and I pointed out a long time ago, Netflix basically cut their delivery costs in half with their Akamai deal, which goes from approx 1.5 cents per GB for 2 months, then hits 6 cents per GB, which is still a great discount. Facts must be pretty inconvenient for you when you try to fit them to your previously decided upon conclusion. Since you love company research so much, I am shocked that you missed this fact, which is so central to your "thesis."

 

"I will tell you what is and is not value investing." You are hilarious. Oh Great One, thank you! Your hubris and grandiosity are sorely needed.

 

You would "would prefer to see this board"..."not be polluted by ideas without any analysis". Oh Commissar, thank you! Cultural pollution must not be tolerated. Please send me to the re-education camp so I can learn why losing money on a short without risk control is central to you elevated plane of enlightenment!

 

Again, my point is not about "right or wrong". It's about risk control if you are, heaven forbid, wrong. As a responsible person, like the boy scouts, you may hope for the best, but you must prepare for the worst. Risk control is perfectly consistent with value investing. What you're doing is arguing philosophically about issues like how many angels can fit on the tip of a match, while the other end of the match is burning. Investing isn't just about fancy theses. It's also about risk control. If you don't agree, that's OK. You don't have to agree. What you shouldn't do is lash out against the messenger.

 

On to Ebix, of course, you probably do need a discounted cash flow model, since 50% growth with Ebix, at 14X cash flow is far too complicated for an elevated being like you to understand is cheap. Given that, I want to apologize that my analysis was so simple and clear that you were unable to enjoy 20% profits on Ebix this week.  ;D Perhaps, if only I was smarter, you could make money from my ideas.  ;D

 

The point about my cost basis is to give you context for the gestation of the position. It was not a speculation. When I bought the stock, it was at a value price. Since then, I have enjoyed growth, multiple expansion, and as we have seen with Akamai, the strengthening of bargaining power with streaming media data providers such as Akamai.

 

I like you T-bone. You are a great example for the board of how not to think. Of course, I'm only trying to help you, but you don't see it. Since you don't need help with your brilliant short, please keep doing what you're doing. As has often been said, perhaps we need people like you in the market so we can make money.

 

What you really want is agreement, and when you don't get it, you lash out and attack the messenger. Congrads on your maturity, deep analysis, good timing, and profits.

 

I respect your positions and your analysis. I don't respect your idea that your are the arbiter of what is or isn't value investing. As Sir John Templeton said, mind are like parachutes. They only function correctly when they are open.

[Guest HarryLong]

T-Bone is a good lesson for all of us here.

 

Bruce Kovner once pointed out that as a portfolio manager, his job is to imagine configurations of the world that are dramatically different from the present.

 

For T-Bone, it seems that it is difficult for him to imagine a universe in which Netflix has double or triple its current subscribers, has a rational cost structure, and profits. His analysis is highly complex, but it is tough for him to imagine a simple scenario that is contrary to his previous conclusion.

 

This is the dark side of confirmation bias. Every piece of evidence which confirms his previous thesis is scrutinized. Any possibility that he is wrong is ignored, railed against, and attacked.

 

That's sad.

 

This is clearly a very emotional issue for T-Bone. He genuinely seems to believe this is a struggle for the soul of value investing or some other rubbish.

 

The incredibly simple possibility that he is wrong is too difficult to countenance.

 

He misses the point. Whether or not he is right or wrong, what is his plan for getting out of the short if he is wrong?

 

That's why I haven't engaged with him on a 5 page analysis. The point isn't that he is right or wrong. He could be right. The point is, if he is wrong, what is his game plan for controlling risk?

 

Big people act big, small people act small. I'm big enough to admit he could be right in his thesis. Is he big enough to stop attacking a straw man and respond to my point about risk control?

 

And yes, T-Bone, value investors can use risk control on shorts.

 

Frankly, I really do want to help. When people keep trying, that means they believe in you. When they stop trying, that means they've given up. I'm just about to give up, T-Bone.

[Guest HarryLong]

As a gesture of good will to T-Bone, here is a link to some research with an example of the valuation analysis he craves. Unfortunately, SCRIBD botched the formatting, but we broke apart the valuation for a complex situation, and I think we have been proven correct:

 

http://www.scribd.com/doc/30801874/USMO-White-Paper-Updated

 

I have tried to put in SCRIBD windows into seekingalpha, where we can do tables with proper formatting, but they have not been agreeable. I sincerely would upload all of our research as is, without putting it in an easy to understand article format, if allowed to.

 

I have put my neck out there on valuation, and we have made it public as SCRIBD shows.

[Guest valueInv]

Since then, I have enjoyed growth, multiple expansion, and as we have seen with Akamai, the strengthening of bargaining power with streaming media data providers such as Akamai.

 

Bargaining power?

 

http://gigaom.com/2007/08/06/cdn-price-wars/

 

Sounds more like a standard price to me:

 

http://blog.streamingmedia.com/the_business_of_online_vi/2010/06/data-from-q1-shows-video-cdn-pricing-stabilizing-should-be-down-25-for-the-year.html

[Guest HarryLong]

If you disagree, where are your numbers? Let's engage in evidence based thinking.

 

 

Since then, I have enjoyed growth, multiple expansion, and as we have seen with Akamai, the strengthening of bargaining power with streaming media data providers such as Akamai.

 

Bargaining power?

 

http://gigaom.com/2007/08/06/cdn-price-wars/

 

Sounds more like a standard price to me:

 

http://blog.streamingmedia.com/the_business_of_online_vi/2010/06/data-from-q1-shows-video-cdn-pricing-stabilizing-should-be-down-25-for-the-year.html

[Guest valueInv]

Bottom of second article.

[Guest HarryLong]

Bottom of second article.

 

NFLX is at 6 cents per GB. What's your thesis on the industry average?

[Stove]

Harry,

 

I don't think you understand the point here.  T-bone is asking you to lay out an argument for the long side case of NFLX.  This is in fact the opposite of confirmation bias.  So far you have avoided doing so.  You say that Tbone is a great example of how not to think.  What are you talking about?  Asking the other side to explain their position is exactly how you SHOULD think.  He (and I) want to hear your side of the NFLX argument, and on this front so far I have been dissapointed with your responses.

[Guest valueInv]

Bottom of second article.

 

NFLX is at 6 cents per GB. What's your thesis on the industry average?

That if you walked into Akamai's offices on Monday and bought 500 TB of capacity, you would get it for 6 cents or less.  ;)

[Guest HarryLong]

Harry,

 

I don't think you understand the point here.  T-bone is asking you to lay out an argument for the long side case of NFLX.  This is in fact the opposite of confirmation bias.  So far you have avoided doing so.  You say that Tbone is a great example of how not to think.  What are you talking about?  Asking the other side to explain their position is exactly how you SHOULD think.  He (and I) want to hear your side of the NFLX argument, and on this front so far I have been dissapointed with your responses.

 

Thanks for missing the point, Stove. T-Bone needs a risk control plan. Period the end. I'm telling him what he needs to hear, not what he wants to hear.

 

I'm sorry you're disappointed. I sculpt my statements to be correct, not to elicit your agreement or disagreement.

[Guest HarryLong]

Bottom of second article.

 

NFLX is at 6 cents per GB. What's your thesis on the industry average?

That if you walked into Akamai's offices on Monday and bought 500 TB of capacity, you would get it for 6 cents or less.  ;)

 

Well, OK, now we've gone full circle. If I walked into China and had the scale of Walmart, I could negotiate hard too.

 

Hence, my point. Their scale is a competitive advantage  ;D

[Guest HarryLong]

It almost makes me sick to see how insipid one or two people are here.

 

My argument has been simple--"OK, you could be right. But if you're wrong, what's your risk control plan for getting out?"

 

It's so simple, but clearly far too complex for a couple of people here. I'm done with this NFLX thread. Clearly, T-Bone doesn't want to think about an answer, so he lashes out with anger. If you don't bring up risk control, and you genuinely care about a short's welfare, you're irresponsible. A lot of people went broke shorting things in the 90's before the bubble popped. But of course, "real" value investors don't need to study history.

 

I'm going to stop casting my pearls before swine.

 

As has often been said, you could publish the rules for successful investing on the front page of the paper, but most people still wouldn't follow them. It's truly sad.

[Stove]

Ok Harry, I see you're going to talk about whatever you want to talk about, which is as far as I can tell incoherent ramblings about 'risk control' and 'what people need to hear.'  You've said nothing of substance this entire thread.  Pardon me if I will abandon any further attempts to elicit an argument from you.  Clearly you're not getting it.

[Guest HarryLong]

Ok Harry, I see you're going to talk about whatever you want to talk about, which is as far as I can tell incoherent ramblings about 'risk control' and 'what people need to hear.'  You've said nothing of substance this entire thread.  Pardon me if I will abandon any further attempts to elicit an argument from you.  Clearly you're not getting it.

 

Get it through your head, another poster has been short NFLX since $110. NFLX closed today at  $162.21. If you care at all about these guys, risk control is not an incoherent rambling, it is necessary to have a written risk control plan when shorting, which is followed rigorously, for investment survival.

 

When people disagree with you, clearly they must be fools. That is a very sad way to see the world. I truly feel sorry for you if that's your reaction to principled, sincere, and honest disagreement.

 

Minds are like parachutes, they only function correctly when they are open--J.T.