Why are some folks in the business media, corporate leaders, etc, taking the nonsensical position that people who take short positions have no goal other then to destroy a company, even going so far as to say that they're anti-capitalism and/or wealth creation? Based on some of the things I've read lately I think some of the critics of short-sellers would've cheered investors who poured money into CFC after their Q3 '07 earnings report and chided the short-sellers, even though (in the end) it's the short-sellers who created wealth for themselves while the people who went long lost money.  

Where is it written that investors can only be bullish? Where is it written that it isn't capitalist to find ways to profit from a company's decline? From my perspective a true capitalist finds way to profit no matter what the situation; there is nothing inherently "less capitalist" about shorting rather than going long because in both cases the goal is to create wealth.  

As it is the companies that are targeted by short-sellers are nearly always ones that have fallen on hard times, companies that are losing money, market share, etc, etc. Why are people deriding the people who decide to short these companies in order to profit from the situation, as opposed to those who pour money back into them based on a single quarter's performance being slightly "less bad" then expected? Furthermore it's not like shorts control the markets (short-squeeze anyone?), the markets on aggregate have to believe a particular company is going down hill for the shorts to make money otherwise they'll lose it. All that's happening is that the shorts are recognizing the fact that a company is in trouble before the market does.  

Anyone who shorted Enron in February of '01 was simply ahead of the curve, not the source of the company's malaise.  

Short-sellers aren't out to destroy companies they're out to profit off of companies that are digging their own graves, pundits shouldn’t be blaming the shorts they should deriding management for creating the situation in the first place.  I find it laughable that anti short-selling pundits will rattle of the names of near insolvent companies that need to be protected from short-sellers, as if they're healthy, growing companies that are being oppressed by capitalist Grinches.  

I ask (again) where are all the anti-short seller crusaders when a company's management gives overly bullish statements that later turn out to be false, are they giving these liars a pass because they  care more about supporting the ideology of always being bullish rather than fair markets? As I said before bad management is what destroys wealth and companies not short-sellers, and overly bullish statements by the management teams of companies like Countrywide, Merrill Lynch and Circuit City (just to name a few) have destroyed 100s of billions of shareholder wealth. If the anti short-seller crusaders are truly interested in protecting wealth creation perhaps they should focus on the real enemy: incompetent, overpaid and dishonest management teams who destroy companies and shareholder equity.  

The markets should be about finding ethical and moral means of making money and generating wealth, not supporting an ideology that says the markets have to go up and anyone who isn't bullish is "against wealth and capitalism".  

Anyone who truly supports fair markets shouldn't be too concerned about whether investors are bullish or bearish, they should only be concerned about whether or not their behavior is legal. I.e. they should be more worried about the recent shenanigans of companies like Merrill Lynch , then they should about people shorting money losing financials with opaque balance sheets . Because dishonest and incompetent management teams are the true destroyer of wealth.  

Methinks a lot of the row over short-selling really stems from corporate managers that need a scapegoat to hide their own incompetence, and investors who need same.

 
Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article. He also freely admits that he shorts the stocks of companies he finds abysmal and goes long on the companies he believes in.