Shorting is a market making mechanism, and whether you love it or hate it, its here to stay. Many forget these simple facts about shorting:
1. Shorters are the minority group in a market. Most of the time, a stock won't get short sold any more than 10% of its free float. If a stock is good enough, then the 90% of the free float that is 'long' should be strong enough to support a stock's price. 2. If short selling does force down the price, then it can bring you a cheaper price if you are long and want to buy more. 3. Shorters don't always get it right. 4. Trading shorters bring liquidity to a stock. If it wasn't for traders, investors wouldn't be able to liquidate their holding if they needed to in a hurry. 5. Ever heard of a short covering rally? They all have to buy back at some point to realise the outcome of their trade.
How about I put some spin on that house example. How is shorting a stock any different to borrowing a loan for a house and then selling that house before the loan is fully repaid? In both occasions, you are selling something that you don't fully own in its outright, but eventually all borrowings are repaid. The world at large doesn't have a problem with the house example, so why do some people have such a problem with shorting of stocks. Someone selling a house that they don't fully own temporarily increases supply in the property market (thus temporarily decreasing the value of the market), just as selling a stock that you don't fully own temporarily increases supply in the stock market (thus temporarily decreasing the value in the market).
Finally,
Car Sales (CRZ) - 12% of the registry is short sold, and is up 30% YTD APA Group (APA) - 11% of the registry is short sold, and is up 9% YTD Flight Centre (FLT) - 10% of the registry is short sold, and is up 30% YTD
If a stock is good enough, shorting won't hurt it's performance.
