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Short Selling

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If you want to understand the bare bones of “going short” in the stock market, read How Porsche hacked the financial system and made a killing by Ivan Krstić.

What is the morality behind going short versus going long?

Investing in shares, or “Going Long”,  is a no brainer – its a force that allows further wealth to be created, rewarding those who see value early, and generally punishing those who forgo making rational judgements. Based on my simplistic understanding below, I’d say “Going Short” is likewise a powerful tool for good – a force that stops wealth from being destroyed – by rewarding those who grab it before it burns up forever. Sure, there may be misuse, especially given the artificial layers of intrigue inherent in a mixed economy. But in principle, shorting is quite heroic!

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Written by xavierseton

May 7, 2009 at 7:14 pm

Posted in Economics