Here’s a great 15-minute Jim Chanos interview, where he discusses the psychology of short selling, and of course, China.
If you’re philosophically inclined, you’re really going to enjoy the intro. Chanos explains why the majority of life, including financial news and reporting, is a silent drumbeat of positive reinforcement (study hard, get good grades, get a job, go long stocks, etc). Short sellers are inherently going against this grain, and due to these psychological stresses, most people don’t want to deal with this – which of course, leads to opportunity on the short side, if you can handle it.
On China, Chanos believes that as bad as the macro picture looks, the micro looks even worse. He does not trust the financial statements or even the viability of many individual companies.
Hat tip Market Folly for the original post.