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Short selling is nothing more than selling before you buy. If you believe that short selling drives prices down, then you believe that taking long positions drives it up. Neither is true.

Short selling provides more information and better liquidity to the market. It's a good thing.



Of course short selling drives prices down, while long positions drive prices up. That's basic supply and demand. What else could determine prices?

I agree that short selling is overall a good thing, though it can also be abused (e.g. naked shorts). I am not claiming any market abuse in the case of Tesla.

Most people do not buy individual stocks based purely on a risk calculation. They also want to believe that the firms are working for good, not evil, because buying a stock means you own part of that company, and therefore are in some small way responsible for its actions.

Short selling is the same, but in the opposite direction. You own a negative fraction of that company, and so your moral relationship to it has a minus sign. I think that Tesla is a good company. But some people think that owning no TSLA is still too much, and I hope they get burned (financially).


Do you think it is ok to sell a stock you think is overvalued and then buy back in at a lower price? Isn't that what shorting is?

As an aside you may enjoy this article written by an old professor of mine that goes into some of this tangentially. Ignore the snark - it's just his personality/sense of humor http://leedsonfinance.com/wp-content/uploads/2009/06/market-...




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