Is short selling unethical?

Let me start by stating what short selling is. Straight from Investopedia, it is “the sale of a security that is not owned by the seller, or that the seller has borrowed. Short selling is motivated by the belief that a security’s price will decline, enabling it to be bought back at a lower price to make a profit.” I’m pretty sure that all of you can already see the ethical qualms which people might have about this, and you’re not wrong, either.

A number of countries have outlawed this, including countries such as France, Italy, Spain and Belgium. The reason that they have outlawed this is that their governments feel that short selling accelerates the decline of a stock, thereby “kicking them while they’re down”, if you will.

Another reason why people believe that short selling is unethical is that it promotes the spreading of false information in order to artificially engineer the downturn of a stock, so that they can make a quick buck. Regulatory authorities have been trying to stop this false spreading of information for ages, so I completely understand this. However, in this technological age, people know which information is trustworthy and from a reliable source and which information isn’t.

It’s like those fake “celebrity death notices” that you see. Nobody really believes them or cares about them anymore. What I believe is that, yes, short selling could be construed, and rightly construed, as unethical as it puts companies further into the red, but some of the disadvantages to a country and to its economy are grossly exacerbated, and have given short selling a negative image when, really, that shouldn’t be the case at all. Isn’t all trading a bit unethical anyways?

3 Comments Add yours

  1. John Tabasco says:

    Hmm it seems like your blog ate my first comment (it was
    super long) so I guess I’ll just sum it up what I had written and say, I’m thoroughly enjoying your blog.
    I as well am an aspiring blog writer but I’m still new to the whole thing.
    Do you have any recommendations for novice blog writers?
    I’d certainly appreciate it.

    Like

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