Last year’s big drop in the share price of Tesla, Amazon, Apple and Facebook owner Meta has helped deliver bumper profits for investors betting against US stock markets in a sharp reversal of their recent fortunes.
Short sellers — investors who believe an asset is overvalued and its price will fall — lost about $572bn in US markets between 2019 and 2021, crushed by low interest rates and a rapid asset price recovery from the outbreak of Covid-19. But last year produced aggregate profits from the strategy of $300bn, according to S3 Partners, a specialist New York-based consultancy that tracks short positions, with tech stocks providing much of the boost.
The revival of the strategy suggests stockpicking investors could reap outsized returns in the coming years now that individual companies and sectors are plotting more diversified paths in markets rather than wafting higher in unison.