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Short sellers have been instrumental in identifying frauds for decades. Without good short seller research, investing in countries like China would be even more
by xkjkls 6y ago
Short sellers have been instrumental in identifying frauds for decades. Without good short seller research, investing in countries like China would be even more impossible than it is today. Short sellers tend to be the good guys, not the bad guys.
- bryanlarsen 6y agoSure, if that short seller research isn't fraudulent itself. For example, there was a video floating around "proving" that Tesla was storing massive numbers of vehicles in desert parking lots that were on the books as sold. I feel that the "good" short sellers like Hindenburg Research tend to be more the exception than the rule.
- maest 6y agoActors on the long side can also be (and sometimes are) fraudulent, so this is not an argument against short selling.
- xkjkls 6y agoMore even so, longs always are going to have greater financial incentive and financial power to publish fraudulent news and research. No one should publish fraudulent research in an attempt to affect a stock, but if we were to invest our resources, we should be more focussed on the long side than the short side.
- bryanlarsen 6y agoCompanies rarely hide good news, so fraudulent good news is much harder to pull off.
- apta_ 6y agoThat's like saying people who engage in whaling are doing it to feed their families. It's hard to believe that there isn't a moral avenue to expose fraud other than resorting to an immoral activity (shorting).
- xkjkls 6y agoNo, its like saying that people engaging in fishing are preventing overpopulation of certain species of fish, which is true of well regulated fishing industries. Short sellers act the same way, to fix over-exuberance in the market. Looking at the market today, we could really use more short sellers to correct the exuberance.