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Im really not an expert in this area. So please tell me how I'm wrong. Shorting a company means you'll benefit from value of the company going down. In normal
by emilsedgh 6y ago
Im really not an expert in this area. So please tell me how I'm wrong.
Shorting a company means you'll benefit from value of the company going down.
In normal circumstances, I can understand that it can have a positive effect on the market as some sort of scrutiny over the companies.
But in a post-truth world, it means some people have the power to short the stock, and then actively try to undermine it by running fake news; effectively becoming a barrier for the companies to create more value, which is in everyone's interest (employees, shareholders, investors, etc) except for those who short.
- vkou 6y agoLonging a company means that you'll benefit from value of the company going up. In a post-truth world, this results in over-investment in poorly ran companies that have good investor PR, but aren't actually solid businesses, compared to their peers. This results in an unoptimal distribution of resources, except for the people who took a long position, and then cashed out at the top. Nothing stops a company from creating value just because people are shorting its stock. Musk's complaints about shorters aren't because shorters are bad for Tesla- it's because they are bad for him, as he dips heavily into debt (backed by the value of TSLA shares), to finance his lifestyle.