The spirited commentary on my latest swipe at Warren serves as the inspiration for this post that will hopefully give those so interested an insight into what I look at when evaluating short term pricing direction. As I implied in that post I concentrate my efforts following “smart” money which I defined as the bondholders for the longs and short sellers as there is often a correlation in the level of short interest and bond pricing.
For those scratching their heads wondering what the heck I’m talking about let’s start by examining the graphic from Wiki on the top left along with this link to their page on the topic which contains a good layman’s definition of short selling:
Short selling or “shorting” is the practice of selling a financial instrument that the seller does not own at the time of the sale. Short selling is done with the intent of later purchasing the financial instrument at a lower price. Short-sellers attempt to profit from an expected decline in the price of a financial instrument. Short selling or “going short” is contrasted with the more conventional practice of “going long”, which typically occurs when a financial instrument is purchased with the expectation that its price will rise. Thus, being “long” is just a way of saying that you own a positive number of the securities; being “short” is just a way of saying that you own a negative number of the securities. Continue reading “About that increased short interest in Berkshire Hathaway……”