On the face of it, an investment strategy specifically designed to gain in value when companies fall in value might not seem particularly responsible. So-called “short selling” is often associated with lurid headlines predicting corporate failure, market abuse and policymakers’ concerns that the practice undermines financial markets. However, a look past the headlines reveals a more complex reality.
While it undeniably has its more unsavoury side, short-selling can also help manage risk more effectively and contribute to market efficiency. Its reputation is unfairly tarnished by the actions of a few cowboys.
The full article is available at https://www.schroders.com/en/uk/adviser/insights/markets/are-short-sellers-ethical/