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Don't Blame the Shorts: Why Short Sellers Are Always Blamed for Market Crashes and How History Is Repeating Itself download ebook

by Robert Sloan

Don't Blame the Shorts: Why Short Sellers Are Always Blamed for Market Crashes and How History Is Repeating Itself download ebook
ISBN:
0071636862
ISBN13:
978-0071636865
Author:
Robert Sloan
Publisher:
McGraw-Hill Education; 1 edition (November 26, 2009)
Language:
Pages:
272 pages
ePUB:
1729 kb
Fb2:
1775 kb
Other formats:
rtf txt docx doc
Category:
Economics
Subcategory:
Rating:
4.4

Don't Blame the Shorts book.

Don't Blame the Shorts book. If Robert Sloan manages to go the distance in Don't Blame the Shorts, it is because his book is as much about historical tensions between Washington and Wall Street as the practice of short selling. He puts it all in the context of the opposing views of the federalist Alexander Hamilton, who was pro-speculation, and Jeffersonian republicans, who were pro-agriculture and convinced that making money from money was nonsense.

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Why Main Street blames financial speculation for economic crashes. Disdain for short selling is as American as apple pie, dating back to our nation’s founding

Why Main Street blames financial speculation for economic crashes. Disdain for short selling is as American as apple pie, dating back to our nation’s founding. But as Bob Sloan argues in Don’t Blame the Shorts, short selling lies at the heart of every Wall Street transaction and fuels the financial system.

Don't Blame the Shorts : Why Short Sellers Are Always Blamed for Market Crashes and How History Is Repeating Itself. Listed in Bloomberg 's TOP 50 BUSINESS BOOKS OF 2010 and shortlisted for Spear's FINANCIAL HISTORY OF THE YEAR AWARD "Robert Sloan works in the hedge-fund industry. As he shows in this readable polemic, dislike of shorting has a long history. Someone has to point out when the emperor has no clothes.

Publisher: McGraw-Hill Education (Professional). Print ISBN: 9780071636865, 0071636862.

Don't Blame the Shorts: Why Short Sellers are Always Blamed for Market Crashes and How History is Repeating Itself. NOBODY loves a party pooper and the shorts-investors who bet on falling prices-are the ultimate poopers. If you want proof, look at the financial crisis of late 2008. Chief executives of investment banks, who had made their fortunes out of free markets, suddenly called for trading restrictions. They had spent years lending stocks to hedge funds so they could speculate against overvalued companies.

Don’t Blame the Shorts. 29th March 2010 by Spear's. Whatever you may think of bankers, Sloan wishes to persuade you that short sellers have been consistently scapegoated through recent history and that they are socially useful

Don’t Blame the Shorts. 0 0 0 0 0. Don’t Blame the Shorts: Why short sellers are always blamed for market crashes and why history is repeating itself Robert Sloan McGraw-Hill, 247pp. Whatever you may think of bankers, Sloan wishes to persuade you that short sellers have been consistently scapegoated through recent history and that they are socially useful. The conflict between the shorts and the rest of us goes back to the foundation of Wall Street, when one founding father, Thomas Jefferson, advocated a vision that eschewed financial speculation and another, Alexander Hamilton, a vision that embraced it as a spur to growth.

Listed in Bloomberg’s TOP 50 BUSINESS BOOKS OF 2010 and shortlisted for Spear’s FINANCIAL HISTORY OF THE YEAR AWARD

“Robert Sloan works in the hedge-fund industry. As he shows in this readable polemic, dislike of shorting has a long history. . . . Someone has to point out when the emperor has no clothes. The shorts were among the biggest skeptics of the subprime-mortgage boom and of the banks that financed it. And when they were proved right, their activities were banned. Gratitude, huh?” The Economist

“If Robert Sloan manages to go the distance in Don’t Blame the Shorts, it is because his book is as much about historical tensions between Washington and Wall Street as the practice of short selling. He puts it all in the context of the opposing views of the federalist Alexander Hamilton, who was pro-speculation, and Jeffersonian republicans, who were pro-agriculture and convinced that making money from money was nonsense. . . . His book is a useful corrective to the view of short selling as ‘unpatriotic’ or uniquely antisocial . . . it is a brave act to take on anti-finance populists at this time.” Financial Times

“In this knowing book about the business of short-selling stocks, financier Robert Sloan gives a modern day lesson on why we shouldn’t shoot the messenger. . . Rather than blast short sellers, we should praise them for exposing management methane. . . .The story may be old, but Sloan’s easy and informative writing makes for a thoroughly worthwhile update.” Barron’s

”Bob Sloan, a Wall Street veteran, cites the confrontation in his new book, Don’t Blame the Shorts, as evidence that blind fury from politicians and unrepentant shrugs from bankers are far from new. As the title suggests, Sloan’s main thrust is to defend the practice of short-selling. . . . Today, Sloan says, the very same battle of ideas is being played out in America . . . this is just the latest bitter expression of the constant tension between a moneyed east coast financial elite, and the manufacturers, mom-and-pop shops and the scrappy entrepreneurs who bitterly resent the power of Wall Street―but don’t want the cash taps to be turned off.” The Observer

“Timely, concise, accessible to the lay reader and with a decorously polemical edge, it is both revealing and entertaining. No matter what the politicians do, the markets will find a way to challenge the finaglers and the optimists who sustain them. Like the poor, the shorts will always be with us.”Spear’s

“Post-crisis reading . . . best books on the financial crisis and its aftermath. . . . While other authors point accusing fingers, in his book, Don’t Blame the Shorts, Robert Sloan leaps to the defense of short sellers who, as he describes, have been long scapegoated for market crashes and are once again in the wake of the recent crisis. The Dutch East India Company was blaming its troubles on them as far back as 1609.” Economist.com

“This book is a rare treat. Unlike most books about Wall Street, it is written from a perspective sympathetic to the banking and securities industries. Better still, Bob Sloan is not only a practitioner and market participant himself, but one with a fine sense of history. Sloan rightly describes prime brokerage as ‘the largest, most unnoticed banking system in the word.’”Global Custodian

“Short and to the point and very well researched. As we are living in an era of history repeating itself, Mr. Sloan depicts the negative market psychology that has transcended Wall Street since the birth of our nation.” Instablog

“Sloan’s recent book…provides an excellent survey of the shorting debate. Sloan recounts how a succession of U.S. government agencies have enacted rules over the decades to restrain short sellers―usually in the aftermath of financial crises such as the one we have just endured. Sloan believes those rules have always had counterproductive results. Sloan’s book is a smooth read, mainly because he has done his homework and has lots of entertaining scoundrels and inept politicians to write about… Sloan’s work provides a real service to market regulators and practitioners alike. With a deft quill, he exposes the futility of government regulation while offering a useful back story to the views of contemporary market regulators.” ABA Banking Journal

About the Book:

On the 80th anniversary of the Crash of 1929, we find ourselves peering backwards through a virtual looking-glass to a time when global markets were in free fall, and venerable financial institutions were in tatters. Yet, here in the present, these same patterns seem to repeat, causing cable newsers, Congressmen, and commoners alike to scream the same refrain, "Blame the short sellers!"

Certainly, short sellers make convenient villains; for one thing, they win only when others lose. But in Don't Blame the Shorts, Bob Sloan taps into a 200-year-old American debate to convincingly and emphatically argue that short selling is not what ails our equities trading markets, but what keeps them honest. To Sloan, short sellers’ objectives are simple: find overvalued securities and bet against overconfident investors. It's an approach that uncovered widespread fraud at Enron, WorldCom, HealthSouth, and other failed outfits long before regulators ever set foot in the door.

Taking the long view of history, Sloan unearths the deep roots of the conflict over speculative investing and its role in our economy. It's a debate that oftentimes puts titans of American history and finance on opposite sides of the divide: Jefferson and Hamilton, over the fundamental nature of America's economic systems; a century later, J.P. Morgan and William Rockefeller, the brother of John D. Rockefeller, who was thought to be part of a cabal of short sellers that brought the country to its financial knees. Further, Sloan reintroduces us to the likes of Ferdinand Pecora, the federal prosecutor whose investigations in the early 1930s revealed a wide range of abusive practices of banks, and led to the creation of vital legislation, including the Glass-Steagall Act.

Don't Blame the Shorts is an eye-opening account that overturns conventional wisdom about short selling, and the vital systemic (and symbolic) role it plays in making financial markets less opaque, more accountable, and, therefore, stronger.

Reviews:
  • ZloyGenii
It's ok. The book is a little bit disjointed. Yet it drives home the point that in search for scapegoats in the financial markets, the shorts are always a target. In fact, studies and practice show the net benefit to short selling in the financial systems. Any witch hunts constrict the equity and ultimately the credit markets. Don't Blame the Shorts refers quite a bit to the crash of 1929 and the subsequent fallout. I would suggest to read The Great Crash of 1929 by John Kenneth Galbraith for a much better account.

One nugget in this book is the description of prime brokers, and how lucrative that business remains for investment banks (p 88-94)... "The money manager rents the operating system from the prime broker, and the prime broker uses its position as a custodian to do the same thing as a bank does: take in deposits of cash and collateral and make a higher spread on relending of its deposit base... The business of prime brokerage is still one of the few businesses in which big Wall Street firms will not disclose the money they make. It is that curative. It is one of the highest-margin businesses on Wall Street."
  • Kifer
I purchased this book to gain a greater historical perspective on the reputation and evolution of short selling in the financial markets. From that standpoint the book certainly achieved its goal. In "Don't Blame the Shorts" Robert Sloan provides a detailed account of the many public arguments against short selling throughout U.S. history and why in every instance the accusations were ultimately deemed unfounded. The book really does provide readers with a historical perspective on market crises and finger pointing. In many ways it shows the reader why history continues to repeat itself when the goal is simply to chastise something perceived by the public as evil, but continues to fail in actually educating those same people on what really causes these crises. Unfortunately what the book fails to do is really educate the reader on why short selling is a valuable market tool, how it works, how it actually acts as a pricing discovery mechanism, keeps the public companies (relatively) honest, and provides investors with a valuable contrarian view to the stock promoters. Ultimately the book would have been far more impactful if it sought to do more than give a historical perspective on shorting but also educate the reader more thoroughly on the practice of short selling itself.
  • Manazar
I am not an economist and I have fairly thin knowledge of how Wall Street and the financial markets work. Since the "crash" of 2008 I have been plowing through every book I can find on why this happened. Some neatly clear my head by a great deal, some are poorly written and serve the authors higher purpose not the public, but this book fits neatly in that category of having just enough information I can understand without having to look up something on every page to learn what the author is saying. I read this book fairly fast as I already had read Soros book on short selling and through CNBC, Bloomberg, and the Wall Street Journal I continue to understand the purpose of short selling in a free market economy.

The book is well written and thankfully the author does not repeat himself over and over to make the book longer. His writing is concise and easy to understand. Although his career has been as a financial manager from hedge funds to Lehman Brothers, he could just as easily be a journalist. He takes the reader through a long history of short selling going back to the time of Hamilton and Jefferson. As he moves through each time period where there has been a financial crisis or bubble he shows how the first outcry is to blame the short sellers. In each of these cameo appearances from history he goes through the political wrangling that goes on to kill short selling as the evil that brought the system down, especially the crash of 1929. After showing how the short sellers were trashed and blamed for all that went wrong he explains how they serve a purpose to bring balance into the not so honest financial systems of the world.

In the category of the not so honest, had people paid more attention to short sellers in the last 15 years the chances of losing everything due to Enron type of schemes would have been lessened. Same for the subprime market, Russian default on their debt, the internet frenzy and a lot more I most likely do not understand. Through this book I finally could see how the short seller are the brakes on what is inherent in a financial system where money is freely flowing, bubble are forming, and lies and greed run amok.

If you would like to blame the short sellers because you lost a lot of money in this last market cycle, perhaps if you read this book you may change your mind.