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Short Sellers: Kill the Messenger!

Tuesday, November 4th, 2008
Posted in Education by Joel Gross

Are short sellers the cause of all the turmoil in the financial markets recently?‚  Did short sellers bring about the crash of the stock market?‚  Did short sellers cause Lehman Brothers to go bankrupt?‚  Were short sellers behind taxpayers being forced to spend $700 billion to help out fat cats on Wall Street?
Of course not.
Short sellers were merely the canary in the coal mine: they told us about the rampant corruption and fraud and massive bubbles erupting in the financial markets.‚  Short sellers are just like the people who buy stocks… except instead of buying them and hoping they go up, they borrow the shares and sell them in the hopes the stock price goes down.‚  Short sellers only short sell stocks that they believe are being mismanaged or have some serious problems.‚  In essence, short sellers are no different than buyers of stock (except they take on more risk).‚  Most people who have a business or economics degree in this country understand this fundamental fact.‚  It’s only the people who are horrible managers who try to hide the fact that short sellers do the market a fundamental service by pointing out weak stocks.