Betting on Zero (2016)

Trader's Film Library #40 · Frauds and scandals. A billion-dollar short position and a lesson that being right and making money are two different things.

Original title: Betting on Zero · Type: documentary · Created by: Ted Braun · Usefulness for traders: ★★★★☆

What it's about

In 2012 investor Bill Ackman announces a billion-dollar short position in Herbalife, which he considers a pyramid scheme. The documentary follows his campaign and the people who lost money as distributors.

What it has to do with markets

The film shows a public battle over a company: activism, the media, lobbying and how hard it is to win when the market disagrees with your thesis. In reality Ackman eventually exited the position at a loss.

Lessons for traders

• announcing a position publicly means losing flexibility (cognitive dissonance, Atlas of biases #64)
• being morally right doesn't mean making money in the market
• there are powerful players on the other side of the position too

What to watch out for

The documentary clearly sympathises with Ackman's thesis. It's worth remembering how the story ended in the market.

Discussion

The discussion takes place in Hetman Capital Club (in Polish). Join the discussion in the Club →

Navigation

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The description outlines the plot without revealing the ending where possible (true stories have a known outcome). Educational content, not investment advice.