Ask HN: Why are people saying short selling is immoral?
Why are people saying that short selling is immoral? You buy a stock if you believe a stock is undervalued, you short it if you think it is overvalued. In either case, you believe in something and take a risk based on that. Short sellers help price discovery and often uncover frauds like Enron. Short sellers take more risk and lose money more often than buyers, and short selling itself is not immoral. Also- short selling is not just limited to hedge funds, any retail investors can do it too.
3 comments
You are free to short the stock as long as it is not a naked short. It means you need colateral to cover. Naked short selling means you sell shares you don't own by borrowing them from other people. 2 very different things.
Short selling is not immoral but the planned manipulation of market with mass shorting perticular stock is.
It can be tackled by imposing the maximum cap of 3-4 percent of a company value by single trader. So at least 20-30 traders are required to do such mass manipulation.
Jealousy. Nothing more. Obviously we've seen the same with day traders, the normal stock market, the housing market. Anyone can invest, but they all want the high end stories of 100 fold increases with no losses.
Not that I've seen it come up in this context but short sellers are incentivized to destroy companies.
See 'Betting on Zero' - https://www.imdb.com/title/tt3762912/ It doesn't matter if he's right or wrong, if he succeeds he also makes a stack of money.
Not that I've seen it come up in this context but short sellers are incentivized to destroy companies.
See 'Betting on Zero' - https://www.imdb.com/title/tt3762912/ It doesn't matter if he's right or wrong, if he succeeds he also makes a stack of money.