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shortsoldhell

To know the meaning of the title of this piece, you have to have been the CEO of a public company, which I once was (on the junior NASDAQ market).

Short selling is when you can ‘borrow’ public company stocks for next to nothing and make huge margins if that company fails.

In other words, it’s like paying 1p at 100/1 that a horse will come in last, when the same horse requires a £1 stake at 2/1 on winning.

At one point shorts controlled more shares in my company than actually existed. How was this possible ? Because of all the vested interests involved, and because share trading makes a weekend in Vegas look like a logical proposition.

Many professional financiers will argue that shorting provides a form of ‘natural selection’ whereby weak companies get their comeuppance, but believe me this is not the case.

In markets, news is meant to be closely controlled and announced. However, my experience is that any good news saw a drop in your share price, since investors presumed that everyone already knew about this, so it was already factored into the share price.

The reality is, for the vast majority of public companies, they have to run parallel universes. One being the business they run and the other being market perceptions.

Now, all of a sudden this ludicrous situation has been broken.

You can buy a watch for £10, but still some people will buy a watch for £10,000. They both tell the time. The important factor in a market is supply and demand, and all of a sudden those who have made so much money for so long mis-manipulating this in public share markets are getting their comeuppance.

And how they are squealing! From the stupid regulators to the loss making shorters, they have been taken to task by forces which are illogical to them.

People are buying shares in GameStop and AMC as if they were cigarette cards. You can’t short the sale of a cigarette card. These are ‘fan investors’, including some spilling over from the ludicrous world of pseudo currencies, where such behaviour has long gone on (when the value of nothing is $250m, why not ?!).

Bitcoin is a currency whose only underlying value is vast environmental damage (you earn Bitcoin by using massive computing power, burning energy in the process).

Adam Smith must be turning in his grave, but the reality is that sentiment is the fuel of markets and social media is a flue.

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