I used to think that good short-sellers could be trained like long-focused value investors because it should be the same skill set; youโre tearing into the numbers, youโre valuing the businesses, youโre assigning a consolidated value, and hopefully youโre seeing something the market doesnโt see.But now Iโve learned that thereโs a big difference between a long-focused value investor and a good short-seller. That difference is psychological and I think it falls into the realm of behavioral finance.
James ChanosSo you know, everyone points out Greece's default record, but the history of a lot of sovereign nations is not a good one when it comes to lending them money.
James ChanosWhat we define as a bubble is any kind of debt-fueled asset inflation where the cash flow generated by the asset itself - a rental property, office building, condo - does not cover the debt incurred to buy the asset. So you depend on a greater fool, if you will, to come in and buy at a higher price.
James Chanos