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Speaker 1: Welcome to Ask Fear and Greed, where we answer questions

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Speaker 1: about business, investing, economic politics, and more. Are Michael Thompson

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Speaker 1: and Hello Sean Ail. Hello Michael Sean Today, I wanted

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Speaker 1: to ask you about something that is a bit mysterious,

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Speaker 1: right about shorted stocks. So I want to know one

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Speaker 1: of the most shortened stocks. Ok going to say shorted socks. Anyway,

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Speaker 1: it's hard. It's like a shorted stock. It's a Fear

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Speaker 1: and Greed tongue twister. Okay, what are the most shorted

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Speaker 1: stocks on the AOX And maybe we should start with

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Speaker 1: a definition of what a shortened stock actually is.

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Speaker 2: Yes, Well, the outcome of shorting a stock means that

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Speaker 2: an investor is taking a bet that the share price

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Speaker 2: will fall a little bit. It means known as short selling.

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Speaker 2: It's we're an investor borrow shares of a stock and

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Speaker 2: then immediately sells them, hoping to buy them back later

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Speaker 2: at lower price and make that profit. That's the idea

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Speaker 2: of it. So when you look at the most shortened

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Speaker 2: stock on the AX, people say, you could follow that.

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Speaker 2: We are not an investment podcast. We are not recommending

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Speaker 2: this strategy for or against in any sense. But people

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Speaker 2: look for shortened stocks, and they don't buy them because

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Speaker 2: I think, you know, someone in the know thinks they're

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Speaker 2: going to four. At the moment. Uranium stocks the most shorted,

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Speaker 2: Boss Energy, Paladin. I mean they've run hard. They've doubled

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Speaker 2: since early March in the case of Boss Energy, seventy

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Speaker 2: five percents in April. In the case of Paladin, that

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Speaker 2: sort of came on the back of positive science for

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Speaker 2: nuclear energy. Big tech companies financing nuclear Trump policies, have

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Speaker 2: they run too hard, So some investors obviously think so,

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Speaker 2: so they're taking a punt that those uranium stocks will drop.

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Speaker 2: Another one in the top ten is actually DPLA. So

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Speaker 2: through the top ten shorted stocks are uranium stocks. The

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Speaker 2: next group are the lithium companies, the mineral resources Bell

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Speaker 2: where the Pilgrim min Uels Linetown Resources. It isn't good, Michael,

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Speaker 2: when you're being shortened and your share price has already

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Speaker 2: fallen sixty percent in the past year. So that's Minray's

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Speaker 2: Minimal Resources in Pilborough. There are other reasons as well,

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Speaker 2: but you're down sixty percent and people taking a bet

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Speaker 2: that you're going to go even further. Not a good sign.

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Speaker 2: Next on the list is a company called Lifestyle Communities.

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Speaker 2: It's a business that builds residential communities for the over fifties.

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Speaker 2: Fallen by more than twenty percent already this year. Rounding

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Speaker 2: out the top ten, Medical Device Group, Polynovo, IDP, Education

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Speaker 2: and Education Group, Tech Group, Silex Systems. They're the companies

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Speaker 2: that are shortened most on the ASEX at the moment.

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Speaker 1: Okay, how then does it play out after that? Do

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Speaker 1: shortened stocks mostly then fall in price?

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Speaker 2: I mean, I don't actually know whether the trend is

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Speaker 2: your friend, and that happens. I can give a couple

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Speaker 2: of examples where it has happened and where it hasn't happened. Okay,

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Speaker 2: So Domino's Pizza It for many months was one of

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Speaker 2: the most shortened stocks on the market. Its share price

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Speaker 2: in recent years has gone from about one hundred and

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Speaker 2: sixty bucks to twenty bucks. Dominos is one of the

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Speaker 2: worst performing stocks in the past twelve months. So you

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Speaker 2: would say the short sellers at that point have made

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Speaker 2: a lot of money off Dominis. Then let's go to

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Speaker 2: Domain Holdings. So Demain Holdings. It was shortened earlier in

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Speaker 2: the year, then got to take over a bit from

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Speaker 2: a US propaty group. Share price went for the roof

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Speaker 2: short sellers did their money. So I don't know that

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Speaker 2: there's actual data to say short sellers generally win, but

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Speaker 2: there's an example where they won big and an example

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Speaker 2: where they lost big.

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Speaker 1: God that is a It feels like a risky strategy, right.

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Speaker 2: I mean it's not for the fainthearted, because.

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Speaker 1: Whether inexperienced or those without knowledge.

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Speaker 2: Yeah, because when you're actually borrowing shares and then sell them,

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Speaker 2: you're really in it. Yeah, you know, up to your eyeballs.

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Speaker 2: So it's definitely one for professional investors, not for you

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Speaker 2: and I.

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Speaker 1: But at least now we understand it a little bit

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Speaker 1: better thanks to that stellar explanation. Thank you very much.

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Speaker 2: Thanks Michael.

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Speaker 1: Remember, if you've got your own question that you would

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Speaker 1: like us to answer, when I say us, it's really

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Speaker 1: kind of the royal US, isn't it, Idiot? I pose

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Speaker 1: it to you and then you answer it and contribute. Yeah,

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Speaker 1: two contributes. Thanks, thanks a lot. All right, if you've

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Speaker 1: got your own one, then please send it on through

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Speaker 1: the website Fear and Greed dot com, dot are you,

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Speaker 1: or go to any of the social media platforms Facebook,

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Speaker 1: Instagram LinkedIn, send your question on through and we'll get

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Speaker 1: onto an asap.

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Speaker 2: I'm Michael Thompson.

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Speaker 1: This is as fear and greed