Episode 597: We’re Short America by NPR Andrew Left, Sahm Adrangi NPR Interview: We’re Short America
If you own a house, stock, bonds, or a retirement account, you’re betting that things are going to get better — that the lines on the chart will keep going up.
Historically, this is a reasonable bet. But you can place a bet in the opposite direction. You can make a bet that things will go down: a short. For example, if you short Apple stock and the stock price drops, you make money. While all the normal shareholders are consoling themselves, you can celebrate. But for the most part, people don’t do it. Experts warn us that we shouldn’t either.
Today on the show, we ignore the advice of some very smart people, and we put our own money down on a bet against something people love. We short America.
H/T Activist Shorts
DAVID KESTENBAUM, HOST:
So I had this moment the other day where I realized that basically every penny I own; it’s all a bet in one direction. It’s all a bet that everything is going to get better. Like, I own a house, right? That is a bet that real estate is going to go up.
ROBERT SMITH, BYLINE: And, you know, it’s sort of crazy because you are a guy who is normally pretty cynical about life.
KESTENBAUM: (Laughter) I looked – my entire retirement account, right? – it’s, like, stocks and bonds. Stocks are a bet that a company is going to be worth more. A bond is a loan to some municipality that’s going to build, like, a sewage treatment facility. It’s a bet that that’s going to work out, they’re going to pay me back.
SMITH: No one would call you Little Mary Sunshine and yet you are doing what everyone else in America does, which is to bet that things are just going to get better. And historically, like, that is not the worst bet in the world.
KESTENBAUM: No, it’s a totally fine bet. It just struck me as odd all of a sudden because there is this other bet you can make, right? You can bet in the opposite direction. You can make a bet that will pay off when things go badly.
SMITH: And perhaps you’ve heard us talk about this before. It is called a short, a short sell. So if you short Apple stock, you’re basically betting that Apple stock is going to be worth less in a month or two months or a year.
See full transcript here.