Don't Blame the Shorts: Why Short Sellers Are Always Blamed for Market Crashes and How History Is Repeating Itself |  | Author: Robert Sloan
Publisher: McGraw-Hill
Category: Book
List Price: $27.95
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Rating:  12 reviews
Sales Rank: 143538
Media: Hardcover
Edition: 1
Pages: 272
Number Of Items: 1
Shipping Weight (lbs): 1.2
Dimensions (in): 9 x 5.9 x 1.2
ISBN: 0071636862
Dewey Decimal Number: 332
EAN: 9780071636865
ASIN: 0071636862
Publication Date: November 5, 2009
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Product Description
"Sloan's easy and informative writing makes for a thoroughly worthwhile update."--BARRON’S "A useful corrective to the view of short selling as 'unpatriotic' or uniquely anti-social."--John Plender, Financial Times, November 16, 2009 "I liked this book. It was short and to the point and very well researched. As we are living in an era of history repeating itself, Mr. Sloan depicts the negative market psychology that has transcended Wall Street since the birth of our nation."
--Ted Stamas, Instablog, November 2009 On the 80th anniversary of the Crash of 1929, we find ourselves peering backwards through a virtual looking-glass to a time when global markets were in free fall, and venerable financial institutions were in tatters. Yet, here in the present, these same patterns seem to repeat, causing cable newsers, Congressmen, and commoners alike to scream the same refrain, "Blame the short sellers!" Certainly, short sellers make convenient villains; for one thing, they win only when others lose. But in Don't Blame the Shorts, Bob Sloan taps into a 200-year-old American debate to convincingly and emphatically argue that short selling is not what ails our equities trading markets, but what keeps them honest. To Sloan, short sellers’ objectives are simple: find overvalued securities and bet against overconfident investors. It's an approach that uncovered widespread fraud at Enron, WorldCom, HealthSouth, and other failed outfits long before regulators ever set foot in the door. Taking the long view of history, Sloan unearths the deep roots of the conflict over speculative investing and its role in our economy. It's a debate that oftentimes puts titans of American history and finance on opposite sides of the divide: Jefferson and Hamilton, over the fundamental nature of America's economic systems; a century later, J.P. Morgan and William Rockefeller, the brother of John D. Rockefeller, who was thought to be part of a cabal of short sellers that brought the country to its financial knees. Further, Sloan reintroduces us to the likes of Ferdinand Pecora, the federal prosecutor whose investigations in the early 1930s revealed a wide range of abusive practices of banks, and led to the creation of vital legislation, including the Glass-Steagal Act. Don't Blame the Shorts is an eye-opening account that overturns conventional wisdom about short selling, and the vital systemic (and symbolic) role it plays in making financial markets less opaque, more accountable, and, therefore, stronger. Author Profile
Bob Sloan is the managing partner of S3 partners, LLC, which he founded in 2003. Prior to S3 Partners, Sloan was a managing director, and the global head of prime brokerage and equity finance and a member of both the Securities Division Operating Committee and the Product Managers Committee of Credit Suisse First Boston. In 1998, he founded and was chairman of the CSFB/Tremont Index Co. From 1989 to 1996, he worked at Lehman Brothers in the equity derivatives and central funding unit.
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Showing reviews 1-5 of 12
 A Needed Look at the History of Short Selling and Government Regulation June 6, 2010
Charles Labanowski (Houston, TX USA)
1 out of 1 found this review helpful
In light of the market events of the past few years - both the financial meltdown and the government response to it - Bob's Sloan's book comes at just the right time to both present an entertaining look at short selling during the past 400 years and clarify many of the public misperceptions about the practice. The book is a perfect mix of objective history and subjective commentary by someone who empirically and historically shows that short selling is far from a nefarious, back-room practice that many politicians and the media would have us believe it is. As he takes us through the history of shorting (and the on-again, off-again regulation that has been enacted for the past four centuries), Sloan makes a convincing and nuanced case that shorting is a socially beneficial practice that tempers "irrational exuberance," keeps management honest, and provides incentives for ALL types of information to enter the marketplace, not just positive information. In essence, short sellers are the private-sector market watchdogs who indirectly encourage transparency and disclosure and directly help investors minimize risk while adding liquidity to the market. Furthermore, he shows how, in a tenuous marriage of convenience with corporate executives, government has consistently pandered to populist urges to curb short sellers (and their First Amendment right to express an opinion), what he describes as "serving public opinion without serving the public." He also exposes the hypocrisy of bank executives who, when lobbying for short selling bans, bite the hands that feed them and their prime brokerage businesses (i.e. the short sellers that pay for their services).
With politicians and the media in a race to the bottom to oversimplify complex subjects in order to gain public approval or ratings, books like "Don't Blame the Shorts" are more valuable than ever to someone who wants to block out all the "noise" and gain a more comprehensive understanding of how the markets work, who the major players are, and the role of government in it all. Simply put, I would highly recommend this book for anyone - finance professionals, academics, students, anyone interested in finance or the stock market - hoping to make sense of the modern financial world and the events of the day. It's educational, highly original, and a much-needed addition to the literature on finance and investing.
Insightful and Timely December 8, 2009
J. Lewis
2 out of 3 found this review helpful
At a time where the government trusts markets less and less, Bob Sloan's book shows that only markets themselves - permitted to operate freely - can protect themselves and us. The short-sellers ferret out bad deeds, not because of statutes, but out of economic self-interest and thank goodness for that! I can assure you if Madoff had been running a public company, the shorts would have gotten him many, many years ago!!
Excellent finance book for people who don't digest balance sheets with their breakfast April 5, 2010
Ilana Greene
2 out of 3 found this review helpful
I have recommended this book to all my friends. Sloan's book is unique, entertaining, well written, easy-to read chronicle of the 200 year history of short selling. Unlike any of the current books concerning the credit crisis and the stock market decline, this insightful book provides great and complete information on the conflict between speculative investing and it's function in our economy. As a hedge fund industry veteran, he moves through every time period where he vividly depicts each financial crisis or bubble and shows how the short sellers were unfairly blamed for all the problems. He cogently argues that short selling keeps the financial markets honest. Interestingly, if more people had focused on short sellers we could have prevented the subprime mortgage crisis from sending the economy into a deep recession; the internet frenzy or even Enron. This book is more comprehensive, eye opening, timely than any other finance book I am aware of. Sloan's advice is fresh, relevant and spot on. He takes many controversial subjects and handles it with poise, grace and logic. If there was a must read on the subprime crisis, this is the one. The bottom line is that this is an understated book, very eary to read and essential. Excellent finance book for people who don't digest balance sheets with their breakfast. I can't encourage you enough to check out it out. So go out and read it, if you haven't.
Seeing the wood through the trees July 12, 2010
Chicago Reader
If you have read the media blaming the short sellers for the Global financial problems and are confused or want to seek the truth, read this book.
Robert Sloan brings together history and finance in an easy to understand, well researched book. He recounts how at each market crash short sellers have been blamed together with details of the indictments.
Sloan explains how short selling is essential for any modern financial market to function correctly. All stocks will eventually be priced according the underlying fundamentals. Directional short sellers (which accounts for only a small part of the market) trade according to the fundamentals, Enron being a great example.
I would recommend this book to anyone with an interest in the financial markets and/or the financial beginnings of America.
although everyone seems to want to blame the shorts January 9, 2010
JD (VA)
1 out of 2 found this review helpful
I am not an economist and I have fairly thin knowledge of how Wall Street and the financial markets work. Since the "crash" of 2008 I have been plowing through every book I can find on why this happened. Some neatly clear my head by a great deal, some are poorly written and serve the authors higher purpose not the public, but this book fits neatly in that category of having just enough information I can understand without having to look up something on every page to learn what the author is saying. I read this book fairly fast as I already had read Soros book on short selling and through CNBC, Bloomberg, and the Wall Street Journal I continue to understand the purpose of short selling in a free market economy.
The book is well written and thankfully the author does not repeat himself over and over to make the book longer. His writing is concise and easy to understand. Although his career has been as a financial manager from hedge funds to Lehman Brothers, he could just as easily be a journalist. He takes the reader through a long history of short selling going back to the time of Hamilton and Jefferson. As he moves through each time period where there has been a financial crisis or bubble he shows how the first outcry is to blame the short sellers. In each of these cameo appearances from history he goes through the political wrangling that goes on to kill short selling as the evil that brought the system down, especially the crash of 1929. After showing how the short sellers were trashed and blamed for all that went wrong he explains how they serve a purpose to bring balance into the not so honest financial systems of the world.
In the category of the not so honest, had people paid more attention to short sellers in the last 15 years the chances of losing everything due to Enron type of schemes would have been lessened. Same for the subprime market, Russian default on their debt, the internet frenzy and a lot more I most likely do not understand. Through this book I finally could see how the short seller are the brakes on what is inherent in a financial system where money is freely flowing, bubble are forming, and lies and greed run amok.
If you would like to blame the short sellers because you lost a lot of money in this last market cycle, perhaps if you read this book you may change your mind.
Showing reviews 1-5 of 12
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