In case the music stopsJanuary 25, 2013 | Access and use are subject to your User Service Agreement.
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IN CASE THE MUSIC STOPS Institutionally sponsored bearbaiting arrived on Wall Street with the Jan. 3 debut of a financial instrument created to punish the short sellers. Deutsche Bank is the promoter of this, the "U.S. Short Squeeze Index." The investor who owns it gains an economic interest in a rotating group of 25 American-listed companies that people who actually read financial filings have gone to the trouble of betting against. Probably, we think, Deutsche Bank would not be marketing the index (only to professional investors, incidentally) unless its clients asked for it, and its clients wouldn't have asked unless they were very sure of themselves. Many seem to be. Now begins a survey of the short side of the stock market as well as an analysis of one particular short-sale candidate. Having arrived at the age of wisdom, your editor will forbear from predicting the direction of the S&P 500. However, he will go so far as to say that when--as now--it seems futile to hedge against the downside, it is certainly not futile to hedge against the downside. Generically, stocks are better than bonds, let us say--and at current multiples and interest rates, we so believe. And the Great Rotation out of bonds and into stocks is at last under way, let us also say. Suppose that America's economy will surprise by its strength, even in the teeth of the gale-force winds originating in Washington, D.C. Say it's all true. It does not then follow that the investment ...
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