> Can you explain what part of it doesn't really work? It seems kind of odd to ask for evidence of something which is a mathematical formula. Counterexample:

> Can you explain what part of it doesn't really work? It seems kind of odd to ask for evidence of something which is a mathematical formula. Counterexample: It turns out that planes can't fly! This is easily demonstrated by reference to the standard formula for calculating buoyancy, F = V x (d1 - d2) x g, where F is the force lifting the plane into the air, V is the volume of the plane, d1 is the density of air, d2 is the density of the plane, and g is the force of gravity. A moment's research shows that a Boeing 747 is heavier than the equivalent volume of air, meaning F will always be smaller than 1. QED, planes can't fly. The fact I can hear one flying overhead right now is, I admit, evidence I may have missed some other factor, but we don't need evidence to evaluate the truth of mathematical formulas, right? :) In other words: Just because something is A factor doesn't mean it's a relevant factor, or isn't overwhelmed by other factors. And we have zero (literally, zero) evidence that short selling is a factor in the ability of firms to raise funds, or in their cost of funds, once we control for other factors. And we have plenty of examples of firms targeted by short sellers who have raised funds on favourable terms. > If they're wrong they push the price the opposite of the way it should be going and when the news comes it snaps even harder the other way. Right, but again, on balance, this effect ends up being drowned out by other effects. You've made a great stab at an explanation for something that isn't really happening, so doesn't really need an explanation.