I read two New York Times articles about shorting stocks this weekend: “The Long and Short of It at Goldman Sachs” and “Short Seller Sinks Teeth Into Insurer”. Afterwards I got to thinking about how the internet can really alter the way this part of the market works (here’s some more info on shorting). Because it’s so much easier to get a message out, you can pump negativity and then short the stock, thereby betting on the downfall you’re helping to create. I don’t imagine this is new at all, but since it’s easier to reach mass audiences, I’m guessing it happens more often.
Anyway, as I was mentioning this to a friend I remembered a Wired article from September on one of Mark Cuban’s businesses. It’s a site called ShareSleuth that investigates public companies it suspects are up to shadiness and is funded by Cuban, who shorts the stocks the site reports on.