Shorts

What’s the point of short-selling? To take money away from those who have too much.

US stock market capitalization is roughly $7 trillion. So all of those trillions of dollars are in public companies and not somewhere else. Maybe that’s not a good idea.

The whole point of finance in general is to make sure society’s money is going to the most worthy projects. In technical terms, to equalize the risk-adjusted marginal return on capital across projects.

(Of course, if “worthy” is measured solely in pecuniary return, then much is missed. That’s why economists want externalities to be priced into the market.)

Shorting a company is a vote against them. The CEO might say it’s mean, but maybe somebody else’s project is more worth funding than theirs. There’s only a finite amount of money after all, so companies have to share.

Imagine you’re building a super-awesome playground. That is definitely more important than having another Arby’s, Hilton, or article in USA Today. Short the hotel and long the playground.

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