Are Bears Evil?

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A couple of items in the comments section caught my eye last Thursday:

0706-evil1  0706-evil2

I know these comments were (probably) offered tongue-in-cheek, but the implication generally seems to be that people who profit from reductions in equity prices revel in the misfortune of others.

Indeed, as the equity market plunges later this year, the scapegoating of short-sellers is guaranteed to happen again. Barney Frank, himself a paragon of moral probity, is already eager to reinstate the uptick rule. And remember, the market is down only a little bit. Just imagine what kinds of crosses will be burning on my lawn when the Dow is under 5,000!

I bristle at the notion that short-selling is un-American or malicious. We didn't cause these problems, but I have no compunction about profiting from them. I personally find bulls these days to be much closer to the definition of "Evil" (lying/manipulating/deceitful) than bears. Bernie Madoff was the king of the bulls. Even his huge yacht was named "Bull". The main difference between Bernie and other permabulls is that he got caught. The same goes for Mr. "Cheesy Moustache" Stanford, currently incarcerated.

And don't simply think that I'm only a doom 'n' gloomer. This beautiful house my family lives in was built on bullishness – – namely, optimism surrounding the growth of the company I started, It grew, prospered, and profited, and I sold it – – – but my faith in the virtue of small business is far afield from the blind notion that equities must go up all the time.

I think the core difference is whether or not one celebrates the hardship of others or simply profits from it. Let's take 9/11/2001, for instance. Suppose the week before you loaded up on puts on American Airlines and United Airlines based strictly on your chart-reading abilities. September 11 comes along, and once the market finally re-opens, your puts up are hundreds of percent.

I see absolutely nothing wrong or immoral with the fact that you've made money. You had absolutely nothing to do with the death and destruction which caused your profits. It just so happens that your assessment of the charts was accurate.

Now, I think it would be callous, stupid, and impolitic to revel in your profits publicly – at a minimum, it would be in horrible taste. You might even decide to take a portion of those profits and contribute to the Red Cross (or, if you're feeling particularly patriotic, donate all of your windfall). But, I say again, your analysis led you to a profitable trade: you did nothing to add evil to the world.

I hope this doesn't come off as amoral-sounding; my Jesuit education is bubbling to the surface, since I enjoy philosophical discourse. But I'm not going to let bears get the blame for the mess that the bulls themselves created.