mqmsi: I found your post quite entertaining, and your arguments similar to those who go to great lengths to prove that, by rights, the South should have won the Civil War. Well, they didn't. They lost.
Solv-Ex went belly up, and that is extremely strong evidence that, in economic terms, its process was no good. No one ever said that no bitumen could be made using its process, the issue was always: Could it be made in an economic fashion?
Along with many Solv-Ex fans posting here, you misunderstand a basic principle of economics. There is NOT an infinite amount of capital in the world. Every project competes with every other project, just as investment in general competes with consumption. Sure, if someone threw billions of dollars at Solv-Ex maybe, eventually, it might get its process to work the way it was supposed to work after the expenditure of a much smaller sum.
But that is true of EVERY failed technology. What company walking into bankruptcy court HASN'T whimpered that things might have been fine if only some angel would have invested a whole lot more money? Until such day comes when investment capital is infinite, investors will pull the plug on bad ideas rather than putting more and more into them until they eventually work.
Sov-Ex's management raised over $100 million and stated that that figure would be enough to bring the company to commercial, profitable operation. In fact, it wasn't even enough to get the pilot plant working properly. Was management stupid, or was it corrupt? Whatever it was, no one could be found to entrust more of their savings to this scheme--the world is full of better ideas.
If you understood that investment capital is not infinite or free, you would understand the benefit that short sellers provide.
A person buying a stock in the market is, by helping increase the price of the shares, aiding the company in its access to capital, should it want any. The buyer is saying that the company, if it wants it, deserves more capital.
The short seller is providing the opposite opinion, that the company in question does not deserve more capital. Since investment capital is neither infinite or free, information about where capital ought not go is every bit as valuable in the allocation process as information about where it should go. Money not thrown down a tar pit in Canada is money available for better uses elsewhere.
As a society, we can only increase our wealth if we allocate our resources wisely, and short sellers have a valuable role in that process. |
