The Bears Are Often Right in Predicting “Bad” Stocks
This post, is interesting in how inaccurate it is. The idea that those who are bears, who have identified serious issues with companies, would only be going after a good companies. This is actually the opposite of what has been shown to be the case.
Actually, in a analysis, looking at negative sentiment, and specifically “Short Selling and Firm Operating
Performance” a direct correlation, was seen, whereby shortselling not only predicted the declines in prices, but also the operating performance of the firm. In other words, the Bears know something.
Iin fact, the more that there is short interest in a stock, the greater the correlation line in operating performance. Think about that. Somebody out there who is analyzing the stock, and identifying serious issues, is better able to predict operating performance than those promoting it.
"While it is well known that short selling predicts future negative stock price performance, it has not been established whether short selling predicts future negative operating performance. We find that firms in the top decile of increases in short interest (an increase of about four percentage points) experience a 21% subsequent decline in operating performance relative to matched control firms. The greater the increase in short interest, the larger the decline in operating performance. The results are robust to alternative performance measures and to sample splits based on firm size. These results suggest that short interest may reflect private information about firm fundamentals rather than other factors that may drive stock price changes."
https://www.jstor.org/stable/
OK, see you all in a few days. When there is some news, other than the misinformation that continues to be promoted on this board.