Mike Scott asks investors, both in the mainstream and SRI fields, whether the practice of selling short on stocks is always a bad thing – or might actually serve as a responsible investment tool. Short selling – profiting from price falls by selling stocks you do not own and buying them back at lower prices before returning them – is the ultimate counter-intuitive activity to most people. It hit the headlines towards the end of 2008 as the meltdown in the financial markets caught up with high profile banks around the world. Regulators in markets including the UK, the US, Australia, France, Belgium and Switzerland temporarily banned short selling in financial services companies after claims that the practice was unsettling markets and artificially driving prices lower. There was, and is, a general feeling – particularly among the public at large – that short selling is a ‘bad thing’. But can it actually be compatible with being an ethical investor? Michael Levas, founder of Florida-based fund Olympian Capital Management, which specialises in working with high net worth individuals, says there is no question that it can be. ‘Short selling has been around for a long time and it’s an integral part of the market place,’ he says. Image: images.businessweek.com

Source: Ethical Performance