So I was reading this blog post about how Porsche screwed the hedge fund market and unintentionally led one man to take his own life. This is probably up Wild Willie's area of expertise, so I'll direct the question to him: I know the financial market should be able to have some freedom in how it conducts it's business, but how is short-selling still a legal way of making money? It just seems about the equivalent of a card counter in Vegas--essentially gambling with knowing a few insider things to give you an edge.
Tuesday, January 13, 2009
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2 comments:
I guess I will turn the question around on you like this ... How would it be illegal?
In the case of Prosche and the hedge funds, there was some insider knowledge, but the first person to act was not the one with the inside knowledge, it was one who knew too little. Prosche's response was only to protect it's investment. What some people don't realize is that the stock market is a place where when you make money, you are makey it from someone else who is losing it. Believe it or not the people who made so much money in the tech bubble and then the real estate bubble were taking that money from someone else. So for every dollar that is made there is a dollar that is lost. The $600 I made last week was $600 that someone lost.
The trick to making money is to remove your emotions from it. Otherwise you end up throwing yourself under a train.
I guess I should have said "ethical" way to make money. I don't know. I'm sure all my investments and life insurance make money in these sorts of ways, but I still don't feel quite right about all this imaginary money being shuffled around to the point that new money magically appears in someone's bank account.
Oh, and taking your emotions out of it--you're starting to sound like Gordon Gecko. ;-)
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