Short sellers floundered during the bull market. But as the market tides have turned, so too have their fortunes.  

“Some people haven’t invested in hedge funds for a very long time,” said Mark Roberts, owner of short-seller consulting firm Off Wall Street. “People thought that short selling is a waste of time.” But now, he added, the market drop shows that investors in hedge funds that were positioned properly have small or nonexistent losses.  

Markets have fallen sharply on investor concerns over coronavirus, officially entering bear market territory on Wednesday. On Thursday, stocks sank further, even as the federal government began taking more stringent measures to curb losses.  

Short-seller Mark Spiegel of Stanphyl Capital Partners has had his eye on the coronavirus since January, he said by phone Thursday.  

“In January, when I saw this coronavirus going nuts in China, I was thinking that this is going to be huge here and we’re behind the curve and it’s going to happen,” Spiegel said.  

He added that he put on a “really big” short position on the NASDAQ, because most of the companies in that index have supply chains going through Asia.  

“In February we were looking really dumb for the first half of the month,” Spiegel said. But, he added, things have changed.  

As of 3:26 p.m. Eastern Standard Time on Thursday, the index had fallen more than 8 percent after finishing the two prior days in the red. Spiegel said he plans to hold onto that short position unless it falls another 10 or 12 percent from where it’s at now, which would be down 30 percent from market highs.  

According to Spiegel, a better bet could have been the Russell 2000, which is the “purest incarnation” of U.S. companies.

“This coronavirus has now moved from Asia to the United States,” he said. “That's why that is getting beat up the worst.” The Russell 2000 had plunged more than 10 percent as of 3:26 p.m. EST Thursday.  

Another strategy Spiegel is employing? “For the first time ever, I also bought some gold,” he said. “I see massive money printing coming down the pipe.” 

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Off Wall Street Consulting is taking a different approach, encouraging clients to look at individual shorts rather than index-wide ones.   

“We've demonstrated over time that good stock picking instead of just being short the market will outperform the market,” Roberts said. He added that the firm has twelve or thirteen short ideas at a time, and that it will continue to publish them as they come up.  

“When everybody’s out, that’s the time to be short,” Roberts said. “I think that’s the lesson of this downturn.”