From: raghu On Thu, Sep 24, 2009 at 2:12 PM, c b <[email protected]> wrote: > CB: Here's some amateurish "speculation" on your question. Along the > lines of Max's answer, first, the shorting isn't insightful when the > bubble isn't ready to burst at the beginning. Shorting is profitable > _when_ the bubble bursts. Also, the shorters don't have control over > allowing the bubble to inflate. They just exploit the fact that it is > inflating at the point it is near bursting, maybe ?
This all gets to the question of whether speculators are trend-damping or trend-amplifying agents. A lot of leveraged speculative activity is today justified on the excuse that they operate in a counter-cyclical manner and provide a "natural" corrective force on market excesses. Baker's article is one example of that. That logic is not borne out by the empirical facts. George Soros admits this quite openly. He should know! -raghu. ^^^^^ CB: If I follow you and I understand what shorting is, it doesn't seem to me that the shorters dampened or amplified the trend of the bubble. If shorting is a bet that the price will fall it doesn't lower or raise the prices does it ? In the context of a bubble , it just anticipates that the bubble will bust , and prices will fall. ? Please correct me, raghu. -- Puritanism: The haunting fear that someone, somewhere may be happy. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
