Kass: Blame Game Is Dishonest

I attempt to create a short book by identifying companies whose business models are exposed to changes in the competitive landscape -- often through new challenges like technology and the Internet. There are no short sellers I know of any consequence -- and I know most of them -- that rely on spreading rumors in order to move their targeted shorts lower in price. The short sellers I know rely on hard-hitting analysis. We have to because, over the long run, stocks rise in price.

Call me old school in my view, but investors ought to be accountable to their investment managers and corporations accountable to their shareholders.

Yale University Professor Owen Lamont once said, "When security prices are wrong, resources are wasted and investors are hurt." Wall Street does not produce (and never has) disinterested and objective research. They are in the business of selling products (stocks, bonds and, ugh, in recent years, derivatives). And Wall Street compensation has, for decades, been a "heads they win, tails they win" proposition.

Short sellers are our first line of defense against securities manipulators who would pump and dump worthless securities. It is important that the stock lending market work efficiently in order for the short sellers to be able to do their job. By preventing fraudulent manipulators from hyping overpriced stocks to the stratosphere, they can prevent investors from buying overpriced stocks.

-- Professor James J. Angel, Georgetown University

In summary, short selling is vital to the balance and functioning of the equity markets.

Investors (individual and institutional) must look into the mirror of honesty regarding their mishaps as playing the blame game card is unprofessional, dishonest and, quite frankly, is getting long in the tooth.

It's time to pay more attention to short sellers when their analytical arguments are well-reasoned and documented, so listen up.

Doug Kass writes daily for RealMoney Silver, a premium bundle service from TheStreet.com. For a free trial to RealMoney Silver and exclusive access to Mr. Kass' daily trading diary, please click here.