Money Talks

Apparently, some folks in Ireland are dismayed by how much money hedge funds have made with short positions in their nation's stock market:

A HIGHLY secretive coterie of London and New York-based hedge funds has made hundreds of millions in profits from driving down Irish share prices.

Last week, Anglo Irish Bank boss, David Drumm, criticised hedge funds which were shorting Anglo shares, adding that it had been hugely damaging to the bank, which has shed almost half its value since June.

For the first time, the Sunday Independent can reveal the identities of the principal hedge funds targeting the Irish market.

We should take a moment to be clear about what's happening here and how grownups settle these sorts of disputes. The hedge funds made profits not because they drove down Irish share prices. They made profits because they sold Irish shares, ... and then the prices of those shares went down. The hedge funds cannot make the shares go down and stay down simply by betting that they will--other traders need to agree with them.

If Mr. Drumm has a different opinion about the appropriate price of his bank's stock, then he should be thanking the hedge funds for offering him a cheap opportunity to buy it back.