Short sellers are good for markets • Hacker News Board

Re: Short sellers are good for markets

#11

Post by fgonzag » Sat, Oct 13, 2018, 4:32 PM UTC

godelmachine wrote: post #4

carbocation wrote: post #2

This article is not readable even in incognito mode, where it claims that I've read my share of articles this month. Tried the 'web' option which also had no effect.

We need someone to post a paywall-bypass link. I don’t have the means or the knowledge to find such a link.

and you definitely have a right to read their content without paying.

That being said, though I agree the economist is allowed to charge whatever it wants for us to read their articles, I don't think their pay walled articles should be allowed in HN, as only a minor portion of the reader base would be able to access the content legally.

Re: Short sellers are good for markets

#12

Post by lixtra » Sat, Oct 13, 2018, 4:35 PM UTC

diminish wrote: post #10

So far I have read in various articles why monopolies, competition, rational actors, irrational actors (for overcoming crisis), long term investors, and short term sellers are good for the markets. Are there any actors which are bad for the market?

Cheaters are bad for the market. I.e. insider trading, because it destroys trust in the market.

Re: Short sellers are good for markets

#13

Post by tryptophan » Sat, Oct 13, 2018, 4:37 PM UTC

Something that the article did not mention: Short sellers reduce volatility and lead to smaller drops.

Why? Because having shorters guarantees that you will have a buyer for a stock that is falling. To exit a short trade you need to purchase shares. This helps prevent stocks from falling too low out of panic or undervaluation, benefiting people who are long the stock.

Re: Short sellers are good for markets

#14

Post by cheez » Sat, Oct 13, 2018, 4:45 PM UTC

Just remember that many people shorted Netflix early to their detriment.

Re: Short sellers are good for markets

#15

Post by simonh » Sat, Oct 13, 2018, 4:47 PM UTC

diminish wrote: post #10

So far I have read in various articles why monopolies, competition, rational actors, irrational actors (for overcoming crisis), long term investors, and short term sellers are good for the markets. Are there any actors which are bad for the market?

if you want to buy and people are selling thats good. If you want to sell and people are buying, thats good. Buying or selling with low transaction fees is good. Being able to do so quickly is good. Obviously if an individual loses money that's bad for the individual, but the health of the market is about liquidity. Being stuck in a position where you cannot buy or cannot sell, especially if there are people out there who would if they could, is the worst situation for the market.

I don't believe monopolies are good, except that having a monopoly might be better than having no market at all. All the rest are just people participating in normal market activity.

Re: Short sellers are good for markets

#16

Post by logicchains » Sat, Oct 13, 2018, 4:49 PM UTC

lixtra wrote: post #12

diminish wrote: post #10

So far I have read in various articles why monopolies, competition, rational actors, irrational actors (for overcoming crisis), long term investors, and short term sellers are good for the markets. Are there any actors which are bad for the market?

Cheaters are bad for the market. I.e. insider trading, because it destroys trust in the market.

Insider trading isn't necessarily bad for _the market_; it brings more information to the market faster, so prices more accurately reflect all factors. Compare for instance a hedge fund using satellite imagery to notice that a refinery has much less oil and trading on this information vs some exec at the oil refinery trading on that information. The former is completely accepted, because of the information it brings to the market, but its effect on the market is the same as that of the latter.

The big problem with insider information is that it generally represents a breach of fiduciary duty; essentially someone is improperly disclosing a corporate secret.

See https://en.wikipedia.org/wiki/Insider_trading#Arguments_for_.... Even Nobel prize winning economist Milton Friedman argued that insider trading should be legal.

Re: Short sellers are good for markets

#17

Post by stephengillie » Sat, Oct 13, 2018, 4:52 PM UTC

Shorting a stock is like renting a car for a year - then selling the car, and still paying rent. At the end of the year, you buy an identical car for a lot less, and give it back to the car rental company. Cars are fungible in this example.

Re: Short sellers are good for markets

#18

Post by stephengillie » Sat, Oct 13, 2018, 4:54 PM UTC

warent wrote: post #3

carbocation wrote: post #2

This article is not readable even in incognito mode, where it claims that I've read my share of articles this month. Tried the 'web' option which also had no effect.

a) Try a different network b) Get a subscription to The Economist

Why should a a highly-paid engineer spend a few dollars, when they can spend the time-equivalent of dozens of dollars to not pay?

Re: Short sellers are good for markets

#19

Post by sonnyblarney » Sat, Oct 13, 2018, 4:55 PM UTC

logicchains wrote: post #16

lixtra wrote: post #12

Earlier quoted context omitted.

Cheaters are bad for the market. I.e. insider trading, because it destroys trust in the market.

Insider trading isn't necessarily bad for _the market_; it brings more information to the market faster, so prices more accurately reflect all factors. Compare for instance a hedge fund using satellite imagery to notice that a refinery has much less oil and trading on this information vs some exec at the oil refinery trading on that information. The former is completely accepted, because of the information it brings…

Insider trading is definitely bad for the market because there would be no outside investing ever if insider trading was the mode that information came about.

Execs have not only access to 'current oil' stores, but basically everything about the company.

It'd be crazy to invest in a company where execs can do as they please, it would be utterly gamified and suppressive to the entire market.

Re: Short sellers are good for markets

#20

Post by gallerdude » Sat, Oct 13, 2018, 4:55 PM UTC

logicchains wrote: post #16

lixtra wrote: post #12

Earlier quoted context omitted.

Cheaters are bad for the market. I.e. insider trading, because it destroys trust in the market.

Insider trading isn't necessarily bad for _the market_; it brings more information to the market faster, so prices more accurately reflect all factors. Compare for instance a hedge fund using satellite imagery to notice that a refinery has much less oil and trading on this information vs some exec at the oil refinery trading on that information. The former is completely accepted, because of the information it brings…

I think that leads to the fundamental question of whether the valuation of a company should be what it is or what people think it is. "What it is" sounds more nuanced, but I think "what people think it is" makes it a lot more approachable for everyday people.