those long buyers

a few months ago, over a very nice zinfandel and overlooking a beautiful valley in the blue ridge, i was discussing the problems in the economy with my brother-in-law john, a perceptive fellow who always enjoys a touch of irony. during this time, there was great discussion afoot that many or all of the problems in the economy, particularly the problems at the big banks, were really the fault of the short sellers. they were driving the prices of the shares of the banks down artificially, it was said, thus making it difficult for the banks to raise capital, and so on. short sellers were reviled as being unpatriotic or worse, and there was a movement afoot to solve the problem by banning short selling.

"ya know," he said, "its really the fault of those long buyers."

well of course, i thought, but what a great turn of phrase. it was, after all, those long buyers who bid up the price of everything and created the bubble in the first place. and of course their co-conspiritors the banks and the fed, who provided all the money and the leverage which facilitated their doing so. those few of us who saw their folly and were selling short into the bubble were the true patriots, trying in vain to counteract the folly and deflate the bubble in an orderly fashion. imagine the pain of shorting lehman brothers, merrill lynch and citibank, and watching them double, against all reason.

furthermore, it was those same short sellers who were later able to provide a modest spurt of buying power just when it was needed. all those long buyers were the ones who were bailing out of their positions when the stocks came down into single digits, and it seems like the short sellers were the only ones buying.

there's a guy called cramer who has been writing all kinds of stuff about how bad short selling is. is he the guy that jumps up and down and wears funny hats on cnbc or one of those financial channels, or do i have him mixed up with somebody else? anyway, he should be that guy, because he seems to be quite the fool. in a bull market, you buy low, sell high. in a bear market, you sell high, buy low. either way, you're providing a balancing force and a vital service to the market, and should be shown a little respect. fugget about it.