Nowadays hedge funds are seen as villains; a destructive band of assassins with short selling as their weapon of choice. Politicians make cheap points by accusing hedge funds of bringing down the market and more os less socialistic measures are taken into action on the financial markets.
In an interview with Mr Jim Chanos (Financial Times) , founder of hedge fund Kynikos he makes the following remarks on the ban of sertain short selling and the ideological shift of belief in the free markets in the US.
It seems to be, it’s capitalism on the upside but socialism on the downside. (…) If you don´t like short selling, so be it. But if the government decides it doesn’t like the price you charge for widgets, then you might be next.
As a conclusion (This is the last time I’ll write a grumpy post covering the short selling ban in a long time, I promise): Short selling is used as a risk minimizer by hedge funds, the objective is not to make profit of a falling market.
In contrast to the short selling ban, the ideological shift of belief in the free markets will be covered very thoroughly.
Glomgold
