Don't Blame the Shorts

Note - If all you are looking for is a detailed account of the modern-day mechanics behind a short trade, Chapter 10 is where you want to start and then read every page. The epilogue, appendix, glossary, notes and references are fantastic for those who want to learn about short selling.In Chapter 10. Sloan did some incredible research to find a hearing in 1989 called “The Short-Selling Activity in the Stock Market: The Effects on Small Companies and the Need for Regulation.” I can't imagine the amount of hours he spent in front of a microfiche machine at the New York Public Library. The transcripts on the hearing are not easy to find but since Google is digitalizing EVERYTHING you can find on the Google Play Store.As I finished, I kept thinking of the saying “History will always repeat itself.” I had to look up the origin of the saying and found out that it can be credited to George Santayana -“Those who do not remember the past are condemned to repeat it.”[b:Don't Blame the Shorts: Why Short Sellers Are Always Blamed for Market Crashes and How History Is Repeating Itself 7165115 Don't Blame the Shorts Why Short Sellers Are Always Blamed for Market Crashes and How History Is Repeating Itself Robert Sloan https://i.gr-assets.com/images/S/compressed.photo.goodreads.com/books/1348597957l/7165115.SX50.jpg 7532575] is a historical account of the public outrage and knee-jerk government policies after financial panics. The one consistent pattern of behavior is the blame towards market participants known as short-sellers.What is unique about Sloan's research is that he does not focus on events after 1929. He shows the reader that this pattern of behavior in the United States has been happening from the days of Jefferson and Hamilton. The plethora of examples help build his case that the stock market needs short-sellers for orderly market activity because they provide liquidity. The use of simple analogies and comparisons throughout the book help the reader understand the complexities of selling a stock short in the market. For example, his use of Frank Partnoys's comparison of the stock market to a pari-mutuel betting window at a racetrack (page 6) made me appreciate the operational processes in place for borrowing shares and repayment of funds.The book has jaw-dropping stories that demonstrate his argument that the cycle of public outrage about short sellers after a financial meltdown followed by congressional committees is does nothing b/c the market needs short sellers.Look at how many times a congressional committee or congressperson has blamed a short-selling after a massive financial panic: 1907Pujo Committee was called to investigate the existence and power of “money trusts.”1929 crash That was a biggie; therefore, quite a bit of peacocking happened in DC for several yearsSenator Smith Brookhart of Iowa swiftly introduced legislation banning short selling.The “BEAR RAID” Senate Committee on Banking and Currency. Btw...why aren't we still using the term BEAR RAID? Its so much fun to say.The Pecora CommissionDowntick RuleUptick RuleSecurities Exchange Act of 1934, which gave the Federal Reserve control of short sale marginsTemporary National Economic Committee1953Judge Medina shoots down the Justice Department (United States vs. JP Morgan juniors son, aka Henry) by telling them to stop chasing phantom conspiracies constructed from flimsy circumstantial evidence. The judge barred bringing any similar litigation against the banks!1986Commerce, Consumer, and Monetary Affairs Subcommittee of the House Committee on Government Operations hearing2009The Book Was Published in 2010, which leaves Mr. Sloan a wonderful opportunity to write more chapters.[a:Robert Sloan 491718 Robert Sloan https://s.gr-assets.com/assets/nophoto/user/u_50x66-632230dc9882b4352d753eedf9396530.png] in this book proves that history does in fact repeat itself.PS - In the acknowledgments, the reader gains great respect for Robert Sloan. He recounts a story that will induce nausea for any writer. He lost his computer that contained the epilogue of this book at Kennedy Airport. No Backup File....Ten Days later, Liz Cummings called him and said she had found his computer, NOW THAT IS AN ACKNOWLEDGEMENT!