God Bless My SHORTS
I love shorts. Not bermudas, capris or the wedgie causing kind. I love short sellers. They are one of the small cells of the free market which gives lifeblood to the organism. Pumping plasma of personal interest and profit seeking, these folks are often misunderstood and improperly blamed.
In what I consider a must read , Joe Mysak gives a great explanation of just one of the many benefits that short sellers can have on a depressed . They say good medicine is bitter, well pass the shorts, I say.
I know many of you guys head back to school in a few days and for those of you working,
I think it is a subject worth revisiting. The alienation of short sellers in the general public (especially in recent academia) is not surprising, after all populism rules the day. If it's true that "in the land of the blind, the one-eyed man is king" then all the blind must sheepishly howl and wail at anyone who finds their way through the darkness. What often surprises me is the amount of hate shorts catch from people already in finance, especially on Wall Street...
For those who don't know it now costto insure California debt (284bps) than that of Portugal (the "P" in "PIIGS"). The "I" of Italy is cheaper to insure than the dept of New York and the second "I" of Ireland is cheaper than Illinois.
Now, that does bring up the panic button worthy issue of these liberal idiot run states going down the tubes...however, with a printing press happy government and our BBW mentality towards hungry fat piggly wiggly municipal governments...that is unlikely to happen.
What is occurring in the meanwhile, is that states are benefiting from the "bad press" and that their costs associated with borrowing for bond issues have actually gone down.
The added benefit of this sort of situation (and THIS is why shorts are hated on)
is the regulatory function of such "predatory greed". Investors (traders especially) don't care about politics, they care about returns. Shorts shine the light on illicit and/or wasteful activity and seek to profit. This murders the status quo, dead.
Think about how much worse our current mess would be if Enron had never been found out. That was the work of a short seller, folks. The Clinton and Bush administrations did nothing to stop Enron, it was a short seller who drove Jeff Skilling into a pissy rage and the truth into the light.
Even though our colossal municipal and state budgets won't go away, there exists the glimmer ofcan force our political spenders to calm down.
Short sellers like all other breeds of the investing animal have their own peculiar traits. They are, however, a crucial part of our organism and we need them to survive. So think about it long and hard the next time someone around you verbally accosts short selling.
In a matter of speaking they are not just attacking them, they are attacking all of us.