QUESTION: The Economist recently had an article on short-sellers. Do you think they are evil?
ANSWER: No. With more and more funds under management moving from active to passive equities managers, there is an increasingly important role for short-sellers: informing the market that maybe something is not right with the stock. Passive equities managers don’t take a view whether something is going to be the next Enron or Wildcard, even though they tend to be wrecks that happen in slow motion, and the portfolio managers read newspapers. Active managers who should be have done their homework on the fundamentals, sometimes will be alerted to do it again when short-selling happens, so are more likely to avoid the Enron-like corporate disasters.
Licensed investment managers who are active managers take note of short-selling, and so should you.
Contact TurnerStreet if you wish to buy our current asset allocation recommendation (we do cash and equity only allocations for our wholesale clients), and the list of the stocks TurnerStreet would buy for a typical wholesale client, or if you would like TurnerStreet to manage your equities and derivatives portfolio.