Short Selling and the Game-Ending Greater Fool

9 Pages Posted:

Date Written: January 14, 2020

Abstract

Equity short sellers face that an acquirer - called here the "game-ending greater fool" - will acquire the short target at a premium to the short price even if the short seller is correct about overvaluation. If short sellers account for this risk, even partially, then prices may be too high even in markets that allow unrestricted short selling.

Keywords: short interest, short sellers, limits of arbitrage, optimism

Suggested Citation

Heaton, J.B., Short Selling and the Game-Ending Greater Fool (January 14, 2020). Available at SSRN: https://ssrn.com/abstract=

J.B. Heaton (Contact Author)

One Hat Research LLC ( email )

20 West Kinzie
17th Floor
Chicago, IL 60654
United States
312-257-3900 (Phone)

HOME PAGE: http://onehatr.com

Register to save articles to
your library

Register

Paper statistics

Downloads
3
Abstract Views
7
PlumX Metrics