SHORT-SELLING

I don't short because I hate the company. I short because I believe the stock is overvalued relative to reality.

Lehman Brothers has been using financial engineering to hide its problems. The firm is not as strong as management claims.

I shorted Netflix and it taught me that being smart about valuation doesn't mean you're right about the stock.

My biggest mistakes have all come from shorting great companies that I thought were overvalued.

Shorting is the most intellectually honest thing you can do in markets. It keeps you from being complacent about the longs.

The short side of the book is not a hedge — it's an active bet. If you're not willing to do the same quality of work on your shorts as your longs, you shouldn't be running a long/short fund.

Short sellers are the financial world's detectives. We get paid to find the bad guys.

Short selling is not the villain of the piece. It is the mechanism by which overvalued stocks get corrected. Without it, markets overshoot badly in both directions.

I made 50% in 2008 by shorting banks everyone said were safe. The consensus was wrong. It usually is.

The market rallied 80% and I was short. That's the worst feeling in investing — being right about the fundamentals and wrong about the timing.

Every stock I short, I know as well as every stock I own. Shorts aren't hedges — they're investments in the other direction.

As it turned out I was quite good at picking our short ideas.

Good short sellers need to be able to withstand a lot of pain and look where no one looks.

Short sellers don't exist to fix the problems. They exist to shed light on the problems and show what companies are doing.

That to me seems to be pretty American when we're out there protecting investors.

Provided that there are capital markets, I think our profession will be as eternal as that of prostitution. You're just betting on human nature, the darker side of human nature.