Post by
Goldy63 on Dec 07, 2021 11:04am
Yup Shorting Is Legal But Still Kills Good Companies.
A well produced “short and distort”? Man, that can be brutal.
You hit the messageboards and start saying, from a fake account of course, that I’ve heard from sales people that company sales are way down this month. Nobody’s going to believe me because I’m just some clueless rube nobody has ever heard of before, but they’ll believe a second person (from another fake account I created) who says they’ve heard that too. A third person might be overkill, but maybe my third fake account says he’s heard there are job cuts coming. Maybe a fourth fake says he’s heard there’s been some fraud in the last numbers released by the company and bad news is coming. SP in following days starts to drop.
The stop loss triggers kick in and a bunch of folks busy at work, not watching their accounts, start auto-selling their stake.
Two years ago, a 10% jump in share price meant something. Today, if a company goes up 40% in a week, management will tell you they’re living in dread as the shorters line up to drive that stock backwards and investors rush for the exits to lock in their profits lest they get caught in the stampede.
The North American markets, right now, are geared backwards. It’s just far easier to short and profit than invest and profit. It’s too easy to be in and out of a stock in an hour. It’s now, more than ever, about game theory than business theory.
And as we near the time when tax loss selling is locked in, and those same sellers can get back into their favorite companies, it’s going to be more important than ever before to not just know what sort of company you’re investing in, but also who is trying to kill it.