“But are you short the market?”

“But are you short the market?” That is my favorite rejoinder to expressions of radical pessimism. It came to mind recently when I read an opinion piece suggesting that “the United States as we know it could come apart at the seams.”

…Besides, shorting the market does not have to be impossibly risky. Just buy some unleveraged market puts each year until that position pays off. That’s not a great investment tactic for most people, but it makes sense for diehard pessimists. Are they even asking around about how to do this, the way you might ask for recommendations for a good restaurant or a masseuse?

I do have friends and acquaintances who work in finance who short particular assets. If they short the entire market, it might be in frothy times — when things seem good and indeed are good, albeit not as good as sky-high prices indicate. That trading tactic, whether prudent or not, is hardly an indicator of mega-pessimism.

There are committed pessimists in the world. Argentina, for instance, is full of pessimists about the Argentinian economy. Typically they have dollar-based bank accounts abroad, which take time and trouble to set up. So there are ways of expressing true pessimism, if you mean it.

Another curious response I hear from pessimists is that they aren’t short the market because the death of democracy in the U.S., or the birth of fascism, isn’t going to be bad for the stock market. That is at least a consistent view — but it is wrong and oddly anti-democratic.

I for one think that America’s biggest and best companies will do better in an era of stability, freedom and economic growth. Fascism is too terrible to succeed for very long.

That is from my latest Bloomberg column, I conclude that very few Americans are truly pessimistic.


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