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No. But I still think short selling is absurd and I don’t understand why we allow it. If you don’t think a company will do well then don’t buy their stocks. Si
by cwhiz 6y ago
No.
But I still think short selling is absurd and I don’t understand why we allow it. If you don’t think a company will do well then don’t buy their stocks. Simple as that. I don’t know why we allow seemingly infinite market gambling that benefits no one except the gamblers.
- liability 6y agoIf Hindenburg weren't financially incentivized to uncover this fraud, it seems likely they would not have bothered and many more people would get scammed by Nikola.
- cwhiz 6y agoThat’s what journalism is for.
- liability 6y ago¿Por qué no los dos? Journalists got to Theranos first, and short sellers got to Nikola first. With both in play, the odds of a timely exposé go up.
- toby 6y agoWorth nothing that Theranos wasn't public, there was no opportunity to short-sell. If there had been they might have been exposed much earlier and done a lot less harm. I knew several people who said what they were claiming was impossible but they didn't really have any interest in being the whistleblower.
- cwhiz 6y agoOnly one of those things is beneficial to society or business.
- liability 6y agoCare to back up that opinion? I'm quite curious to know why you think Hindenburg exposing this fraud to the world, and consequently saving countless more people from being scammed, isn't beneficial to society and legitimate business.
- sokoloff 6y agoIf Hindenburg is correct, I believe they provided a valuable information service to market participants by researching, writing, and releasing that report. It happens that the economic incentive arose from shorting, but could have just as easily come (less efficiently) from buying naked puts.
- cwhiz 6y agoI don’t think options should exist, either. Hindenburg is just doing journalism.
- deleted 6y ago[deleted]
- bjl 6y agoShorting serves a valuable purpose. It removes capital from the hands of people stupid enough to believe fraudsters, and reallocates it to people who dont. The whole purpose of markets is to facilitate the efficient allocation of capital, and shorting is clearly an important part of that.
- xuki 6y agoShort selling is just ... selling. Every time a shareholder sells a stock for whatever reason, they effectively short it.
- doktorhladnjak 6y agoSelling stock you own and selling stock you borrowed from somebody else with the obligation to return it at some point are pretty different
- sokoloff 6y agoYes, the latter is far riskier and obligates you to buy shares later, meaning you have to have more conviction in your investing thesis. (Disclosure: I’m short $NKLA after Hindenburg published. I believe it’s more likely going to the teens [and possibly worse] in 2020 than sustainably into the mid-40s. If it holds $30+ through 2020, I’ll probably cover.)
- xuki 6y agoFor the seller it's different, to market it's just a sell.
- bluedevil2k 6y agoShort sellers provide liquidity to the market by providing purchasable shares in an equity when none might exist. Short selling does NOT provide infinite market gambling. Short selling is incredibly risky with an unlimited downside, these types of investors can lose all their money and then some pretty easily. Short sellers in Tesla over the years have bled huge losses. "The markets can remain irrational longer than you can remain solvent." (Keynes) is appropriate here, as stocks like Tesla continue to climb the short sellers keep having to infuse cash to cover the mark-to-market prices. Eventually, they run out of cash.
- thrill 6y agoNot quite. Short sellers have to "borrow" shares from your broker, who is on the hook to replace them if the short seller cannot.
- bluedevil2k 6y agoEven more clarification, they loan the shares to the short seller from individual brokerage accounts without most of those individuals even knowing.