We told you so.

Back when the Masters of the Universe started fighting over Herbalife (NYSE:HLF), we warned the normals to stay out of it.

Don’t go long. And for heaven’s sake, do not go short, we said. Run far, far away from this Stalingrad of ego.

Copycatting Bill Ackman’s short position — a billion-dollar bet that regulators will shut Herbalife down for being a pyramid scheme — is a great way for little old Joe Blow retail investor to blow himself up.

And, lo and behold, now comes the disclosure that corporate-raider-turned-activist-investor Carl Icahn has taken a whopping 13% stake in Herbalife. Shares are soaring on the news, squeezing out pretty much anyone who is not Bill Ackman and his massive Pershing Square hedge fund war chest.

Why would you want to be in the middle of this — long or short? Hell, especially short.

Retail investors don’t have Ackman’s financial resources for this ego-fueled war of attrition.

Look at it like this: Say I’m the little guy, and I decide to follow billionaire Ackman into this trade — so I borrow shares to short. I have to put up collateral to do that.

Then Icahn or whomever comes in long and the position moves against me. So now I have to put up more collateral.

And since there is no limit to how high the stock can go, there is theoretically no limit to my losses.

At least when you go long, you can’t lose more than your principal. Sure, a company can go bankrupt and the stock goes to zero … but it can’t go negative.

At the same time, going long on Herbalife is only slightly less irresponsible. Icahn wants to take this thing private to destroy Ackman? Great, go for it — but what kind of crappy pyrrhic victory is that?

Here’s how Wall Streeter Damon Vickers (who has no skin in this game) sums it up in an email (emphasis mine):

“Either Icahn will be left holding the bag on a company with inflated value and a questionable business or Ackman gets destroyed as the squeeeeeeeze begins. Either way get ready for some blood. One of these guys isn’t coming out of this alive.”

So, if you’re long on Herbalife, you are a tiny stakeholder in an overvalued stock with suspect business practices, and you’re betting that Uncle Carl will buy you out before regulators shut it down? That is, before a new wave of shorts come in to drive down the stock?

That’s not investing. It’s not even trading or speculating. Hell, it’s barely gambling. It’s more like putting cash near an open flame and hoping it doesn’t burn.

Here’s the incomparable Josh Brown on the insanity that is Herbalife’s stock:

“If you think any of this sh*t is trading based on fundamentals or technicals, you’re basically like a clown in the zoo. The 2013 Wall Street maxim is: Buy on the lawsuit, sell on the CNBC appearance. Price to Ego is a very difficult metric with which to invest.”

We said it before, we’ll say it again:

If Ackman is Godzilla and Icahn is Mothra, that makes you Tokyo.

As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.