I’ve been asked a bunch why “shorting” (betting against companies) exists, and also seen a bunch of people call for it to be banned (or some such). I did some asking and here’s why shorting can be good:

When someone is able to bet against a stock (rather than just sell it) that provides incentives for them to find problems with the company. Are they reporting fraudulent numbers? Mistreating workers? Creating dangerous or faulty products?

Shorts are, in the best light, the highly paid hawks of finance. Scouring companies for lies, misdeeds, and shitty products. This is why lots of billionaires really really hate them.

They are trying to poke any sore spot and peak around every corner. Business owners hate that. Every company has weaknesses they’d rather the world not know about.

Now, they are doing that in the hopes that they find something that will make them a bunch of money.

And some of these people also do nefarious things to do that. They lie, they make guesses, create false narratives and they manipulate.

And maybe a lot of this fact-finding should be able to be done by regular investors and, I dunno...regulators.

But short sellers have discovered really big problems with companies and products and there is value in that.

As long as we all know that when billionaires say shorting should be illegal, they are not looking out for the little guy. They just want fewer pains in their asses.

Addendum: there are other useful reasons for shorting, but they are to do with financialization. Mostly I was curious why billionaires hate them so much and to what extent they might sometimes provide real value.