Translated by Andrew Vanburen from: 沽空非發國難財 不宜全面禁止 (中文翻譯, 請閱讀下面)
SHORT SELLING is an easy target for blame in a bear market.
But the practice serves a useful and healthy function in China’s capital markets and should not be banned outright.
We all know -- and feel -- that capital markets are sinking left and right the world over.
Investors are seeing their life savings slip into the abyss and there seems to be no light at the end of the tunnel in many stock exchanges across the globe.
Are there any safe harbors left out there? And if so, where?
The best harbingers of better things to come may actually lie in those lying lowest, the sectors and counters that have lost the most.
Shares clinging to the absolute bottom of the market are for some the best opportunities going forward.
We well recall that despite “public criticism,” it was the speculative short-selling crowd that foretold the softening of the manufacturing sector.
But I believe a ban on short selling, while ostensibly conceived of good intentions, is actually a dangerous attempt to “play God” and grossly interferes with the natural process and evolution of the capital markets.
First of all, it is necessary to understand two things that have occurred that may not be totally causal.
During the approach of a cataclysmic storm, when the horizon is already darkened with ominous thunderheads, all take to worrying, fretting and even panicking.
But during this anxious time, it might be that the only beneficiary is the small shop owner hawking away the best umbrellas, and he can make a pretty penny.
Yes, the small mom and pop shop runs up the prices on the umbrellas and can actually score quite a windfall profit as lightning bolts begin to trace dire designs across the blackening firmament.
But we should also keep in mind that the shopkeeper did not cause the storm, nor should he or she be in any way blamed for the terrible tempest to come. Instead, others should emulate the actions of the resourceful umbrella purveyor and look for similar opportunities to make hay while the sun doesn’t shine.
Also, even if the shopkeeper didn’t exist, and his store was a simple apartment without umbrellas for sale, the rains would still come all the same. And after the deluge, those with the good umbrellas will be drier for the experience than those without, and lucky owners will have a product ready for repeated deployment the next time the skies open up.
So this begs the question: If the shopkeeper doesn’t exist, will the rains still arrive? Of course they will.
And by the same token, if short sellers don’t exist, will the market still fall? The answer is also: of course it will.
Until last year, China’s A-share markets had a short sale mechanism in place.
But I believe the institution helped temper outright selling pressure over the past three years and shortened the extended declines by its balancing act -- its dialectical function, if you will.
No Place for Malicious Short Sales
Greenlight Capital President David Einhorn – one of the best known short-sellers in today’s marketplace -- describes his hedge fund as “long-short value oriented.”
He has made a fortune for himself and his clients by borrowing a stock for a designated period and then selling it, with the intention of repurchasing the shares at a lower price down the road – i.e. textbook short selling.
He must be doing something right, because his results mimic the early returns of a Ponzi schemer.
His fund, which he began in 1996 with one million usd, has historically generated an over 22% year-on-year net profit for investors.
His short-selling positions have been prominent in Lehman Brothers -- among other heavyweights – which went kaput in spectacular fashion in 2008.
And just last year, he was among a dozen ex-directors of another financial group -- New Century -- that dished out nearly 100 mln usd to settle a laundry list of lawsuits against the firm, which first filed for bankruptcy in the pre-Crash days of 2007.
But some good for the general non-clientele public does come from Einhorn’s windfalls.
As per his pledge in the self-authored book Fooling Some of the People All of the Time, his Greenlight Capital donated half its profit share from their short position on Allied Capital in 2009 (nearly 7 mln usd to a children’s charity organization as well as -- rather ironically -- the Project On Government Oversight (POGO) and the Center for Public Integrity (CPI).
Therefore, not only trickle-down dividends can find their way into charitable causes, but short-selling does serve its purpose in any market – perhaps even more so when the chips are down.
See also:
BAOFENG: Aiming To Crystallize New Orders With Swarovski
沽空非發國難財 不宜全面禁止
投資市場，死傷枕藉。
股民驚魂甫定，欲找晦氣，在所當然。元兇何在？最佳線索，莫如誰在跌市中，反而滿載而歸。沽空股票的投機者，被認定製造跌勢，自成眾矢之的。禁絕沽空，似為大義，卻全然捉錯用神，甚至影響市場進化。
首先，要明白兩件事先後發生，未必有因果關係。以一例言之：暴雨忽至，人人慘變落湯雞，而一小店老闆，則趁勢盡賣雨傘，賺了一筆。老闆藉暴雨賺錢，但他與暴雨的形成，毫無關係。即使小店、雨傘並不存在，天要下雨，還是照來不誤。沒有沽空的市場，會否下跌？A股市場直至去年，才有沽空機制，可在之前的○八年，仍然難逃一劫，兼且跌勢領先全球。
無沽空亦難逃一跌
其次，有論指沽空增加沽壓，擴大跌幅，損失倍升。細想市場機理，這點也是以偏概全。借貨沽空，困難重重，一來要借到，二來要排隊，成交絕不容易，非如一般買賣。跌市之中的沽壓，更多來自持貨股東，飛身出逃所致。當然，未買者袖手旁觀，買盤減少，也有「責任」。所以同事間常開玩笑：要股票不跌，應該立法禁止「沽貨」，或「禁止證券戶口持有現金」，何用找沽空者出氣？
沽空的確會放大跌幅，但須知沽空常有，而跌市卻非，不是奉旨有賺。買股坐艇，可以束之高閣，來生再見。借貨沽空，一旦中伏，卻是現世便要還，不論股價多高，都要買回，所以也會放大升幅。既然正負相抵，沒有害處，反而有良好副作用：市場流通量上升；長揸股東借出股票，多了一重利息收入。
將沽空訴諸道德，評為「發國難財」，也不盡然。相反，透過沽空，投機者順手清理市場瘀血。例如有些公司，誇大本身業務及盈利，再派高息以穩民心，由於根本沒有現金流，所以會適時配股集資，如是者周而復始。沽空者利之所在，當然先做足功課，才身體力行出手。其行動向市場發出警號，令原股東離場，股價下跌，配股難度增加，最終斷其糧道，公司爆煲，以竟全功。
惡意沽空易被挾死
美國長短倉基金經理David Einhorn，就是此道表表者。他發現聯合資本(Allied Capital)帳目上屢次減值不足，又濫用政府資助中小企的配對貸款，谷大生意、盈利，然後配股派息。可是監管機構愛理不理，惟有自己造淡，再公告天下。當中與公司拳來腳往，相當精采，有興趣可參閱Einhorn著作Fooling Some of the People All of the Time。最終經過六年纏鬥，聯合資本爆廠被收購，Einhorn則將七球美金利潤，捐予慈善機構。○七年照辦煮碗，狙殺雷曼兄弟，馬到功成，一年之內連根拔起。
固然也有散布流言、惡意中傷的沽空者，但就算是實牙實齒，沽空造假的公司，都極易被挾死，何況是攻擊堅實的股份？自然會被市場收拾。整體而言，沽空者有其貢獻，所以一如另一財經書名所言：Don't Blame the Shorts。
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