Bill Ackman

It's historic. So we at Pershing Square shorted very few stocks. And the reason for that is short selling is just inherently treacherous. If you buy a stock, it's called going long. You're buying something, your worst case scenario is you lose your whole investment. You buy a stock for 100, it goes to zero, you lose $100 per share. You buy one share, you lose 100.

You short a stock at 100, what it means is you borrow the security from someone else. The analogy I gave that made it easy for people to understand, it's a bit like you think silver coins are going to go down in value. And you have a friend who's got a whole pile of these 1880 silver US dollars. And you think you're gonna go down a value. You say, hey, can I borrow 10 of those dollars from you?

You short a stock at 100, what it means is you borrow the security from someone else. The analogy I gave that made it easy for people to understand, it's a bit like you think silver coins are going to go down in value. And you have a friend who's got a whole pile of these 1880 silver US dollars. And you think you're gonna go down a value. You say, hey, can I borrow 10 of those dollars from you?

You short a stock at 100, what it means is you borrow the security from someone else. The analogy I gave that made it easy for people to understand, it's a bit like you think silver coins are going to go down in value. And you have a friend who's got a whole pile of these 1880 silver US dollars. And you think you're gonna go down a value. You say, hey, can I borrow 10 of those dollars from you?

He's like, sure, but what are you gonna pay me to borrow? I'll pay you interest on the value of the dollars today. So you borrow the dollars that are worth $100 each today. You pay them interest while you're borrowing them. And then you go sell them in the market for $100. That's what they're worth. And then they go down in price to 50.

He's like, sure, but what are you gonna pay me to borrow? I'll pay you interest on the value of the dollars today. So you borrow the dollars that are worth $100 each today. You pay them interest while you're borrowing them. And then you go sell them in the market for $100. That's what they're worth. And then they go down in price to 50.

He's like, sure, but what are you gonna pay me to borrow? I'll pay you interest on the value of the dollars today. So you borrow the dollars that are worth $100 each today. You pay them interest while you're borrowing them. And then you go sell them in the market for $100. That's what they're worth. And then they go down in price to 50.

You go back in, you buy the silver dollars back at $50 and you give them back to your friend. Your friend is fine. You borrowed 10, you gave him the 10 back and he got interest in the meantime. He's happy. He made money on his coin collection. You, however, made $50 times the 10 coins. You made 500 bucks. That's pretty good.

You go back in, you buy the silver dollars back at $50 and you give them back to your friend. Your friend is fine. You borrowed 10, you gave him the 10 back and he got interest in the meantime. He's happy. He made money on his coin collection. You, however, made $50 times the 10 coins. You made 500 bucks. That's pretty good.

You go back in, you buy the silver dollars back at $50 and you give them back to your friend. Your friend is fine. You borrowed 10, you gave him the 10 back and he got interest in the meantime. He's happy. He made money on his coin collection. You, however, made $50 times the 10 coins. You made 500 bucks. That's pretty good.

The problem with that is what if you sell them and they go from a hundred to a thousand and Now you're going to have to go buy them back. And you're going to pay, you know, whatever, $10,000 to buy back coins, you know, that you sold for 500. You're going to lose $9,500. And there's no limit, right, to how high a stock price can go. Companies go to $3 trillion in value, right?

The problem with that is what if you sell them and they go from a hundred to a thousand and Now you're going to have to go buy them back. And you're going to pay, you know, whatever, $10,000 to buy back coins, you know, that you sold for 500. You're going to lose $9,500. And there's no limit, right, to how high a stock price can go. Companies go to $3 trillion in value, right?

The problem with that is what if you sell them and they go from a hundred to a thousand and Now you're going to have to go buy them back. And you're going to pay, you know, whatever, $10,000 to buy back coins, you know, that you sold for 500. You're going to lose $9,500. And there's no limit, right, to how high a stock price can go. Companies go to $3 trillion in value, right?

Tesla, a lot of people shorted Tesla, saying, oh, it's overvalued. He's never going to be able to make a successful electric car. Well, I'm sure there are people who went bankrupt shorting Tesla. That's why we didn't short stocks.

Tesla, a lot of people shorted Tesla, saying, oh, it's overvalued. He's never going to be able to make a successful electric car. Well, I'm sure there are people who went bankrupt shorting Tesla. That's why we didn't short stocks.

Tesla, a lot of people shorted Tesla, saying, oh, it's overvalued. He's never going to be able to make a successful electric car. Well, I'm sure there are people who went bankrupt shorting Tesla. That's why we didn't short stocks.

But I was presented with this actually reporter that covered the other short investment we made early in the career, a company called MBIA, came to me and said, Bill, I found this incredible company. You got to take a look at it. It's a total fraud and they're scamming poor people. And we should say that MBIA was a very successful short. It was.

But I was presented with this actually reporter that covered the other short investment we made early in the career, a company called MBIA, came to me and said, Bill, I found this incredible company. You got to take a look at it. It's a total fraud and they're scamming poor people. And we should say that MBIA was a very successful short. It was.

But I was presented with this actually reporter that covered the other short investment we made early in the career, a company called MBIA, came to me and said, Bill, I found this incredible company. You got to take a look at it. It's a total fraud and they're scamming poor people. And we should say that MBIA was a very successful short. It was.

A big part of it was that we used a different kind of instrument to short it, where we reversed that sort of... We made the investment asymmetric in our favor, meaning... Put up a small amount of money. If it works, we make a fortune. Whereas short selling is you kind of sell something and you have to buy it back at a higher price.