Shorting the Stock Market During a Tragedy: Is It Un-American - Part 2

Part two of my decision to short the market after 9/11.

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Why I shorted after 9/11.

Note: This is part two of a series

It was five days before the exchanges decided to re-open, and in that time there was a constant call in chat rooms, on message boards, and from the talking heads on TV about how people should buy the stock market to show their patriotism.  I disagreed.

Going into the market September 17th with a long only bias was not trading.  There were strong emotions that were driving me to trade, but the trading itself, as always, had to be as free of emotion as possible.

  If there were short opportunities, I was going to take them.

Short selling has been around as long as stock exchanges have.  It’s the boogey man that gets trotted out every few years as the cause of everything from price manipulation to market crashes.  There have been attempts to outlaw it and short term bans have been put in place, but it has never gone away, because it is part of the mechanics, the fabric you might say, of the stock market.  

Our markets exist on buying, selling, and short selling.  You may not like short selling, and you can refuse to participate in it, but if you don’t acknowledge it as a critical component of a freely traded market, then you are not acknowledging pure capitalism, a truly American endeavor.

I took a number of short day trades on the 17th, as well as buying some longer term holdings, most notably in the airlines.  I made a good profit on the day, and I did not feel a bit of guilt about it.

  In fact I felt good about it.  I felt like this was my personal response to the terrorists who caused death, destruction, and terror, on a scale that had previously been unimaginable.  That I took all of that, and in the most American way made an albeit tiny positive out of it.

That night I walked out onto my front yard.

  I was thinking about the events that had happened to our county.  How for the first time in my life our country was at war.  Not the type of war I had seen on so many movies of the week of my youth, but a new type of war.  A war I feared would still be ongoing when I was dead and gone, and my grandchildren were reaching adulthood.

I thought about a similar night like this, just six days before.  How I looked to the sky and heard the sound of jet planes overhead.  How a chill went through me as I realized that the only airplanes in the sky at that time were warplanes.  Warplanes manned by brave men and women who were protecting me and my family, and my ability to trade in a free market.  I don’t know why, but at that moment I felt ashamed, like a coward who took a tiny risk to achieve a theoretical win, while others were taking the ultimate risk in order to achieve a real victory.

The next day I took all the money I made the day before, doubled it, and donated it to the families of NYC firefighters.  It just seemed like the right thing to do. Since then I have never forgotten that the markets I love so much and have been so good to me, are in the end an abstraction.  They emulate highs and lows, and pain and pleasure only through the emotions we ascribe to them and that can never be confused with real life.

To read the first article in this series please click this link.

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