Short Selling
Updated2023-12-10
2023-12-04 Did Hamas Short the Israeli Economy? This is a fascinating story amidst the general tragedy and bleak carnage of the last two months. Two scholars analyzed trading in the days just before the October 7th massacres in southern Israel and put together a pretty strong case that someone essentially shorted the Israeli economy based on foreknowledge of the attacks. Specially they tracked short selling of an exchange traded fund which gave investors broad exposure to the Israeli economy.
I’m far from an expert on this topic of this kind of analysis. So perhaps someone with greater technical knowledge could find gaps in the argument. But it seems pretty convincing: short-selling just in advance of October 7th that greatly exceeded what had been seen during various crises over the last twenty years – COVID, the great recession, various Israeli wars and domestic crises. If you’re a Haaretz subscriber they have a detailed write-up here. You can also read the paper published at SSRN here.
As we’ve learned recently, Israel had a decent amount of advance intelligence on an attack something like the one that happened on October.7th. Most of that intelligence was disregarded in the belief that Hamas lacked the capacity to mount an attack on that scale and also because it was widely believed that Hamas hoped for a sustained period of “quiet” with Israel. But the exact date of the planning would have been a closely guarded secret. It seems likely that the trades were placed by someone with various tightly held knowledge of Hamas’s plans. https://talkingpointsmemo.com/edblog/did-hamas-short-the-israeli-economy
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