Friday, January 29, 2021

Shorting Schadenfreude

GameStop at Bentley Mall in Fairbanks, Alaska

What is the ethics of shorting, or betting on the misfortunes of a company? And what are the ethics of countermanding a short and preying on the misfortunes of the shorter? The issue came into the news the other day when a populist movement rose up against the short position taken by Citron and Melvin Capital against GameStop. The movement which started on Reddit caused a stock which sold at l9, early in the month, to go up to 330. Except with the question of the divesture of companies whose products threaten the environment, the stock market is usually looked at as value-free arena. Schadenfreude is the psychoanalytic term for the enjoyment of other people's suffering. It’s an emotion you’re undoubtedly familiar with. You won the lottery of life. Your neighbor didn’t. You feign concern, but secretly you smugly enjoy your feelings of superiority and his or her pain. So, let’s invent a company called Schadenfreude which traffics in a derivative which itself plays off misfortune, pithily called "the Schadenfreude." It’s run by a savvy crew of Harvard MBAs who may have spent a year studying at the London School of Economics. What if your short of this new derivative is met with a popular uprising by those who may not like the crew at Schadenfreude, but like you even less? What are you going to do with your Schadenfreude short when you run up against a group out to give you the finger for being precisely who you are, a wily investor who makes a lot of money while they barely can pay off the mortgage? Now you’re sitting in the dog house due to the machinations of a bunch of market savvy sans-culottes.  

Read "MAGA and Coronavirus" by Francis LevyThe East Hampton Star

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