Short Shrift For Short Sellers : Planet Money Short sellers get a bad rap. Sometimes with good reason. But overall, they're an inevitable and useful part of a healthy financial system.
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Short Shrift For Short Sellers

Short Seller Andrew Left and Tesla CEO Elon Musk Michael Newberg for CNBC, Mark Brake for Getty Images hide caption

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Michael Newberg for CNBC, Mark Brake for Getty Images

Short Seller Andrew Left and Tesla CEO Elon Musk

Michael Newberg for CNBC, Mark Brake for Getty Images

Unlike most investors, short sellers make money when the value of a company falls. And they don't have a great reputation. They're often regarded as the vultures or hyenas of the financial world, preying on weak companies, and sometimes spreading negative rumors to bring a company down.

But quite often, short sellers perform a necessary task. They have a financial incentive to expose weakness and uncover the truth about a company's status. And when they do so, honestly and transparently, the market benefits.

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