But isn’t it unethical and morally disturbing to short companies and profit from their share price moving down in value?
There is nothing wrong in publicly stating that you are negative about a stock and profiting from any downswings as long one declares that he’s short – just ponder for a moment – how is this different to an investor who ‘buys’ a stock and brags about the merits of the company he invested in. This is the nature of the market consisting of buyers and sellers. When shorters focus on a particular company, there tends to be reason; either overvaluation – or even wrongdoings of the target companies.
Recently, especially with the crisis facing the UK financial industry and market turmoil there have been some calls from certain people for a ban/limit on the ability to short a security. Can shorting be ever contained?
For every investor or speculator that sells there is one the other side that buys so I do not think personally that banning short selling is an answer to stopping volatility. Market manipulation does need to be investigated but in the grander scheme of things I don’t think we should restrict free trade and ban short selling.