Given the nice start to the new year we've had, I felt it only proper to highlight shorting, specifically with a interview by Jim Chanos which covers his career, the psychology of shorting, and China (July 2012):
Chanos began in 1980 working as an investment banker, working for a Blyth Eastman Webber. As many on this site are well acquainted with, he spent his days on the deal team, making pitchbooks and modeling companies. He then left to join a brokerage firm and eventually did research at Deutsche Bank before being fired and launching Kynikos Associates.
On the psychology of shorting, Chanos believes that the while the skillset for analyzing companies is the same as the long side, the psychology is vastly different. Bringing up a "positive reinforcement cycle" and the associated noise, he notes that because wall street is positively-biased, short sellers face a constant barrage of criticism. Most people psychologically cannot reason competently (or want to) given such stresses, and are therefore unable to successfully (profitably) short.
On China, Chanos explains that his thesis starts from a micro (stock-specific) perspective and only then leads to his overall thesis for China. Starting from commodity producers who were making record earnings during the financial crisis to high rise construction in China, Chanos explains the government/power chain.
Finally, here's an article on some shorts he's looking at for the new year.
(credit to http://www.jesse-livermore.com/blog/five-reasons-to-think-twice-before-… for picture)
Somewhat baffled that no one has commented on this thus far. Thank OP. Good read.
Groves High School represent! Love ya Jim.
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