Marcus Aurelius

Demonic Short Sellers

Same is true with almost any form of financial instrument. A person goes short on a particular item and then feeds rumors to the media, if the media is gullible enough the stories get out and the shorter makes money.

Any financial instrument can be used for legitimate business financial practices or for rank speculation. Heck even the simple and straight-forward practice of buying stock with cash and holding it until the price goes up can be reduced to rank speculation. The difference being most people understand the practice.

Demonic Short Sellers

A lot of people talk about the evil short trade and those who engage in them. However, many people see derivatives as a speculative game where you roll the dice and hope your numbers turn up, rather than a tool traders and institutions use to mitigate risk.

I have a basic grasp of derivatives namely options and futures. When studying up on them I noted a very strong resemblance of puts to my auto insurance policy. In both cases I pay a premium for a time limited policy. In the case of my auto policy if a deer jumps out and totals my car I sell the car at its pre-wreck value to the insurance company, if I have a stock and it crashes then I sell the puts and at least get something back.