Troy: I am glad that at least you recognized that my tongue was somewhat in cheek when I explained why people have a moral obligation to short overpriced stocks. I was thinking of putting some kind of smiley faces on the note more people might figure it out.
But I was partially serious. As Adam Smith explained 220 years ago, what people view as private greed actually combines to produce social good. Placing bets long or short, all anyone is trying to do is make money. But just because they think they are only looking out for number one, doesn't mean that market doesn't have a bigger use for them.
To the extent that investors' support for some companies and opposition to others does affect the stock prices, they are helping to allocate society's capital toward where they think it is needed, away from where they think it is wasted. To the extent that they are right in their predictions, they amass more capital and have more influence in the next round. It is good for society that more money (allocation power) be placed in the hands of those who are good at accurately predicting what society needs. If you are bad at it (buy losers or short winners) your money, and thus your ability to influence future outcomes, is taken away from you.
That is why this battle over SOLV is so interesting. Should we give $600,000,000 to this company for this project, or would that money be better allocated to other companies for other projects? Maybe Asensio is greedy, but so are the longs here. Both positions are morally equal. |
