Short selling is not unethical – whatever the world's biggest pension fund tells you

Japan’s government pension fund is to stop lending the overseas shares it owns to short sellers. But in reality, there’s nothing wrong with short selling, says John Stepek. Here’s why.

People have a problem with short sellers. I'm not sure why this is. Maybe it's a market-wide manifestation of the notion: "if you can't say anything nice, don't say anything at all". Maybe it's because most people are long, and so the number of people who want prices to go up is always much bigger than the number who want prices to go down (which is how short sellers make their money). Or maybe as with so many things finance-related it's just plain old ignorance. In any case, now the world's biggest pension fund is trying to turn it into an ethical issue.

How to make money from shares going down

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.