if you want to be liked, don't be a short-seller. some other investors might defend you, at least in the abstract, as an important part of a healthy and efficient market. but to most you are—at best—a ghoul who profits from the misfortune of others. at worst, you are a corporate raider who bets that honest firms will go bust and then spreads lies about them until they do. even your defenders will melt away if you pick the wrong target (shares they own) or the wrong moment (a crash in which many are losing money but you are **it).
If you want to be liked, don't be a short seller. Some other investors may defend you, at least on the surface, as an important part of a healthy and efficient market. But for most people, you're at best a ghoul who profits from someone else's misfortune. In the worst-case scenario, you're a corporate raider, betting that honest companies will go bankrupt and then spreading lies about them until they do. If you choose the wrong target (the ** they have) or the wrong timing (a crash where many are losing money, but you are making money), even your defenders will disappear.
since the authorities are often among these fair-weather friends, the list of historical short-selling bans is long. it features 17th-century dutch regulators, 18th-century british ones and napoleon bonaparte. the latest addition, issued on november 6th, came from south korea's financial services commission. it has caught the zeitgeist well, and not just among the army of local retail investors who blame shorts for a soggy domestic stockmarket. wall street's "meme stock" craze also cast amateur traders as the heroic underdogs, pitted against villainous short-selling professionals.
Since the authorities are often also friends of these people, the list of historical short-selling bans is long. It features a 17th-century Dutch overseer, an 18th-century English overseer, and Napoleon Bonaparte. The latest regulations, issued on November 6, come from the Financial Services Commission of South Korea. It captures the zeitgeist very well, and not only in the army of local ** investors, who blame the domestic ** downturn on shorting. Wall Street's "meme" craze has also shaped amateur traders into heroic losers, pitting them against short-selling professionals.
meanwhile, one of america's best-known shorts, jim chanos, wrote to his investors on november 17th to announce the closure of his main hedge funds. "our assets under management just fell to the point where it was no longer economic to run them," he explains, defining that point as "a few hundred million". at its peak in 2008, a few years after predicting the downfall of enron, an energy company, his firm was managing "between $6 billion and $7 billion". since being set up in 1985 its short bets h**e returned profits of nearly $5 billion to its investors.
Meanwhile, Jim Chanos, one of the most prominent short sellers in the United States, wrote to his investors on November 17 announcing the closure of his main hedge**. "The assets we manage have fallen to a point where they are no longer fit for operation," he explained. He defined this as "hundreds of millions of dollars." At its peak in 2008, a few years after the collapse of Enron, the leading energy company, his company managed "$6 billion to $7 billion" in assets. Since its inception in 1985, its short bets have returned nearly $5 billion in profits to investors.
the shorts who remain in the game, then, face two threats. the first is an old one: that regulators, egged on by those who view short-selling as immoral, will clamp down on their business model. the second, more insidious, threat is that investors h**e lost patience with that business model and no longer want to put their money into it. should short-sellers fall prey to either danger, financial markets will be worse at allocating capital, and those who invest in them will be worse off.
Therefore, the bears who remain on the track face two threats. The first is an old problem: regulators, egged on by those who believe short selling is unethical, will outlaw their business model. The second, more insidious threat is that investors have lost patience with this business model and no longer want to put their money into it. If short sellers fall prey to any kind of danger, financial markets will be worse off in allocating capital. And those who invest in them will fared even worse.