netkingcol

thinking outside the tank

Short selling is back – some say it never went away

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Short-sellers in the stock market are back in business and Barclays was the first target. I think I understand how short-selling works and how it is supposed to enhance market efficiency by driving assets to their true value.

It wouldn’t work quite so well if the other short-sellers, those who were not prevented from trading, had not been so very active over the last five months. I refer to the media whose peddling of gloom is unrelenting.

To some extent the short-sellers will thrive on the self-fulfilling forecasts of rising unemployment, falling house prices, and business failures. I don’t even want to repeat the numbers. I strongly believe that at this point of the economic cycle the media should restrict themselves to delivering news i.e. things that have actually happened, and to keep to themselves the unreliable, uncertain forecasts that look good as headlines but do no service to the economy.

Copyright © C.Hazlehurst 2009

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Written by netkingcol

January 17, 2009 at 11:21 am

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