7 ms·

Good investigative reporting into shady business practices good for this world. However short selling companies before dropping your investigation is a massive

Good investigative reporting into shady business practices good for this world. However short selling companies before dropping your investigation is a massive conflict of interest. Muddy waters is incentivized to produce a scandalous hit piece, rather than necessarily do fair or accurate reporting. They will make money regardless. The damage their reporting does may make a self-fulfilling prophecy, ensuring they don't get a reputation hit for inaccurate scoops. I'm surprised the economist didn't even include a nod to the potential manipulation going on here.

nodesocket 6y ago
Absolutely. Just look at Pershing Square‘s Bill Ackman. He goes on CNBC essential calling for the end of the world, turns out he had credit protection on bonds and tuned a huge profit[1]. [1] https://markets.businessinsider.com/news/stocks/bill-ackman-hedge-profits-billions-coronavirus-tanks-stock-market-economy-2020-3-1029035562 https://markets.businessinsider.com/news/stocks/bill-ackman-...
- camjohnson26 6y ago
  And a thousand other hedge fund managers talk about how bright the future is after investing in stocks. Maybe we shouldn’t rely on hedge fund managers for our opinion of the economy.
  - WalterBright 6y ago
    I believe them about as much as I believe the promoters of "Get Rich Through Real Estate" seminars. If their methods worked, they'd be getting much richer doing real estate than pushing seminars. I recorded one once on TV, and carefully went through the spiel. It was fairly complex, and I was suspicious it was hiding something. Turns out, it relied on tricking the other party into accepting a bond with a maturation value of $10,000 instead of $10,000 now. The money was made on the difference.
    - pdonis 6y ago
      > If their methods worked, they'd be getting much richer doing real estate than pushing seminars. More generally, one should be suspicious of anyone whose business model is not "get rich doing X" but rather "get rich by selling the secret of how to get rich doing X".
- thoughtstheseus 6y ago
  Bill Ackman had already sold half his hedge and moved aggressively into stocks when he said that. He talks about it on Farnam Street if anyone is interested.
camjohnson26 6y ago
How is that different from posting a positive article after investing in a company? Company press releases have a conflict of interest but they still contain valuable data. In the same way bearish research brings up issues that no one else wants to talk about, readers should expect the source to have a bias since no one is completely objective.
impostervt 6y ago
Is it a conflict of interest? Seems to be directly related to the short-seller's interest.
deleted 6y ago
[deleted]
cwmma 6y ago
You are correct, but really only about the first couple of times he does it, subsequent times people know his M.O. and he either gets a reputation for overblown bullshit, or a reputation for finding actual fraud.

nodesocket 6y ago

Absolutely. Just look at Pershing Square‘s Bill Ackman. He goes on CNBC essential calling for the end of the world, turns out he had credit protection on bonds and tuned a huge profit[1]. [1] https://markets.businessinsider.com/news/stocks/bill-ackman-hedge-profits-billions-coronavirus-tanks-stock-market-economy-2020-3-1029035562 https://markets.businessinsider.com/news/stocks/bill-ackman-...

camjohnson26 6y ago
And a thousand other hedge fund managers talk about how bright the future is after investing in stocks. Maybe we shouldn’t rely on hedge fund managers for our opinion of the economy.
- WalterBright 6y ago
  I believe them about as much as I believe the promoters of "Get Rich Through Real Estate" seminars. If their methods worked, they'd be getting much richer doing real estate than pushing seminars. I recorded one once on TV, and carefully went through the spiel. It was fairly complex, and I was suspicious it was hiding something. Turns out, it relied on tricking the other party into accepting a bond with a maturation value of $10,000 instead of $10,000 now. The money was made on the difference.
  - pdonis 6y ago
    > If their methods worked, they'd be getting much richer doing real estate than pushing seminars. More generally, one should be suspicious of anyone whose business model is not "get rich doing X" but rather "get rich by selling the secret of how to get rich doing X".
thoughtstheseus 6y ago
Bill Ackman had already sold half his hedge and moved aggressively into stocks when he said that. He talks about it on Farnam Street if anyone is interested.

camjohnson26 6y ago

How is that different from posting a positive article after investing in a company? Company press releases have a conflict of interest but they still contain valuable data. In the same way bearish research brings up issues that no one else wants to talk about, readers should expect the source to have a bias since no one is completely objective.

impostervt 6y ago

Is it a conflict of interest? Seems to be directly related to the short-seller's interest.

deleted 6y ago

[deleted]

cwmma 6y ago

You are correct, but really only about the first couple of times he does it, subsequent times people know his M.O. and he either gets a reputation for overblown bullshit, or a reputation for finding actual fraud.