If you haven’t already, I strongly admonish you to go read Jesse Eisinger’s column today:
Here’s the money quote:
"The shorting life is nasty and brutish. It’s a wonder anyone does
it at all.
Shorts make a bet that a stock will sink, and nobody else wants
that: Not company executives, employees, investment banks nor most investors.
That’s why most manipulation is on the other side; fewer people object when
share prices are being pumped up. For most on Wall Street, the debate is whether
shorts are anti-American or merely un-American.
Yet in all the paranoia about evil short-sellers badmouthing
companies, what is lost is how agonizingly difficult their business is. They
borrow stock and sell it, hoping to replace the borrowed shares with cheaper
ones bought later so they can pocket the price difference as profit. It’s a
chronologically backward version of the typical long trade: sell high and then
Go forth and read . . .
It’s a Tough Job, So Why Do They Do It?
The Backward Business of Short
WSJ, March 1, 2006; Page C1
UPDATE March 2, 2006 10:32am:
See below for more text