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Some comments from Chanos:
- The first company he looked at as an analyst was an enormous fraud; this turned him onto the short side of the business.
- He got his start in 1985; since when the Dow has increased ten times, not exactly fertile ground for a short-seller.
- Short-selling’s most important function is that it brings real-time financial detectives to the markets; regulators are good at finding things after the fact while short-sellers are financially motivated to find frauds.
- Short-selling is now considered much more acceptable as it has been popularized by hedge funds.
- Why he likes China as a short: because there is a credit bubble and because profits from companies are “skimmed” and never get to the passive investor.
- The real estate bubble is still inflating in China (he warned about it three years ago).
- He isn’t bearish on all of China but certainly is about the property market.
- The best short in the world is to be short government promises.
- He thinks investors should be exposed to assets that will beat inflation (including equities) and that really long dated-bonds are a bad idea.
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