The people who whine about shorts are ridiculous IMO.
Yes, shorts have some negative incentives that we need to be careful about.
But they’re the only ones in the entire market who don’t have incentives to lie about how well a company is doing. A decently run market with a reasonable number of shorts would not build up to the bubbles we see regularly that collapse and need to be bailed out.
It was the shorts who noticed the housing bubble in the first place. If there’s were more of them they could have popped it much more gradually and less painfully than the crash we had which has been the precursor to a lot of the terrible things we’ve faced since then.
The real problem is the SEC has largely abdicated its role to meaningfully prosecute fraud. Short sellers shouldn't be our only real defense against fraud, but that's the reality we (Americans) live in.
How is someone short not incentivised to lie that a company is doing poorly? I can’t see how the incentives change at all. Maybe I’m misunderstanding you.
Yes, shorts have some negative incentives that we need to be careful about.
But they’re the only ones in the entire market who don’t have incentives to lie about how well a company is doing. A decently run market with a reasonable number of shorts would not build up to the bubbles we see regularly that collapse and need to be bailed out.
It was the shorts who noticed the housing bubble in the first place. If there’s were more of them they could have popped it much more gradually and less painfully than the crash we had which has been the precursor to a lot of the terrible things we’ve faced since then.