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what's going on investors 8k from fallible here and today we're gonna talk all about short sellers are they beneficial to stock market or are they just immoral haters they ruin everything and as you can guess I was reminded of this topic by Elon Musk and his crazy tweets lately Elon that he's a little crazy first he settles with the SCC and then he decides to go on Twitter and start trash-talking them sarcastically calling them the short seller enrichment Commission's now no matter who you are and how much money you have that is a dumb move screwing with the SEC it's like poking a snake it's gonna bite you everybody knows you don't mess with the alphabet boys the SCC the IRS they can just make your life so terrible it's never worth it Eli here is just getting too cocky thinking he's different he's making those Bobby Axelrod moves just purely out of ego and if you watch billions you know how much trouble axe gets himself into and that's trouble that's completely avoidable it's just not necessary don't but it does make for a great prestige TV show so I don't mind well you know just stop talking buddy this is real life you're really gonna screw yourself over but I am empathetic to where he's coming from because Elon he gets the worst from the short sellers just getting beaten down on a lot and I guess when you're finished being mad at those short sellers you got to move on to a different target so that a sec okay that's scary but of course Elon did say something about the short sellers too which was actually kind of funny because he was responding to his own tweet from 2012 you could see in the progression that he changed his tune a little bit back then What did he say he said even though they caused me grief I would still defend the rights of shorts to exist they're often unreasonably in maligned that was in 2012 that he tweeted that but then just recently he's like the last several years have taught me that they are indeed reasonably maligned and by the way maligned mean slandered or defame basically means hated on and I did look that word up because I'm stupid and I thought maligned was the same word as misalign but turns out they are different words but basically elands opinion has changed where before he thought short sellers were are unreasonably hated on where now he thinks all the hate they get is pretty reasonable and he even thinks what they do should be illegal and then Elon had a bunch of other tweets trying to explain why short sellers are bad for markets which really didn't make much sense Elon knows how a lot of things work but in this area he really doesn't but overall is Elon sorta right our short seller is actually bad for the market no he's not right short sellers actually provide a lot of benefits for the market for example they provide liquidity so what a short seller does is borrow shares and then sell them so that's technically adding more sellers into the market which is good because when you have a bunch of buyers they need to buy from somebody sellers are providing that supply and more buyers and sellers in a market it means a more liquid market which is a more efficient market with better prices and that's good for everybody short sellers also reduce volatility in the market because they basically do the opposite of what everyone else is doing when other people are buying at highs short sellers are selling at highs when other people are selling at lows that's when short sellers are buying again so by counteracting what other investors are doing they're basically smoothing out the peaks and trows in the market and you get less volatility because it's a more even distribution of buying and selling now the most important thing that short sellers do is aid in price discovery so first thing they do is they help curb excessive speculation so when things are getting way out of value because people just keep buying and buying and there's a frenzy these are the guys coming in and trying to short the stock and bring it back down to its fair value but more than that they also serve as kind of the police of the market finding companies that are just frauds and full of problems and bringing them down the short sellers provide the much-needed balance they're the only ones incentivized by a market actually going down think about all the other big players in the market they're all incentivized by a market going up the government wants the market to go up because then all the politicians will get reelected because people are happy the financial media wants the market to go up because then more people are tuned into their services and then they make more money because the alternative when the market is going down is that people just get fed up with the media they don't want anything to do with the stock market let alone watch something about it and then you got banks who are always selling investment products and they're once again selling more products when the market is going up so they want to keep pumping it up higher - then you have the company's management teams obviously they want the market going up - because that means their company's stock price is doing better so short sellers are the only guys incentivize a little bit differently so help provide that bounce but it can get bad if short sellers aren't ethical if they start spreading rumors and trying to purposely manipulate the stock price well that's illegal and I agree with you on there they're misleading people and that's not right but honestly most of the time it's not short sellers misleading people its management Ilan yeah funding secured yeah now I already made a video talking about why I think Tesla's a stupid short which if you haven't seen I'll link to it above now in that video I was talking about in practice me personally I would not short something so volatile especially because Tesla has so much positive sentiment behind it most of the time when you try to short it you're gonna get burned it just doesn't make sense for your P&L at this point to try it but the general thesis behind why these guys are shorting Tesla that actually might be legit I don't think they're just spreading rumors like Elon claims I would not be surprised at all if there is some very illegal accounting stuff going on at Tesla I would actually be surprised if there isn't and I'm sure that's part of the reason why they're c-suite rotates so often especially their CFO that's not a good sign but I don't know I mean me personally I would never bet against a guy like Elon even if he's doing something illegal I honestly don't care I truly believe in what he says that he's doing which is helping humanity he's not just some billionaire trying to make more money by doing this if he was why would he pick such difficult projects there's a lot easier ways to make money especially when you're as smart as him with stuff like the accounting problems I would honestly look the other way and instead just support it which I think that's what our government should be doing you basically got a national treasure in Elon like why aren't you supporting him a hundred and fifty percent so in that sense I get frustrated with SEC to like leave the guy alone and let him do what he needs to do because nobody else is doing but you know that's just my opinion what do you guys think let me know in the comments what you think about short selling and Tesla and general I'll probably respond to all and if you liked this video make sure you subscribe to this channel and hit that Bell for a notification of the next one we publish about three videos a week all market and business related so subscribe and I'll see you in the next video stay fowl Bob bye
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