Those who used to read my old blog know that I have no problem at all with short selling. See some of my old posts like 'The (Very) Basics of Short Selling', 'Short Selling *is* American' and 'Pick Your Spots When Selling Short'. So in that light,when I saw that NPR's Planet Money podcast did two episodes about short selling I was very interested in seeing how they'd handle the subject. The second of those episodes was the story of the first short sale ever, which was back in the days of The Dutch East India Company:
There have been short sellers throughout history. Today, the story of a man who was the very first short seller. The first person to bet that a stock will go down. It doesn't go well for him.
That was a very interesting story but I want to focus on the first of the recent episodes, which was titled "We're Short America". That episode was their version of 'Short Selling 101'. They explained how shorting worked and actually took a small sum of money and shorted the S&P 500. But they left out some things that I think are very important to fully explaining the risks of shorting.Read More ➞