We don;t have different defs. I was merely highlighting that “the market” and “the perps” are getting harder to distinguish, with the only one’s knowing for certain are the prime broker(s), one’s administrator, one’s auditor, and the plunger-perp himself.

I would agree that the classical bear-raid is an art form, but in modernity, there are increasingly more mechanistic chain-like-reactions that can be discovered that are more similar to the classical in result than not. One can see examples of this at the micro-structure level where algorithms duel with each other to lower bids, spoof offers, canceling and replaceing bids in replies to others in a financial whirling-dervish dance that is as wondrous and absorbing to watch as ant colony’s at work. CXO has a compendium of summaries on short research until I gather my links for you.

Also we may have different definitions of bear raid — you seem to be describing occasions when a lot of shorts and sellers independently glom onto stocks, generally on bad news. For me a bear raid has to have some sort of narrower, collusive conspiracy angle to it, preferably without any actual news triggering the selloff.

Of course, if the conspirators can manufacture some actual news in collusion with a competitor, regulator, or more likely a friendly broker, all the better.

Wish I’d gone to Cambridge now.

Cassandra, can you link to the academic research which shows short sellers generate excess returns? Seems slightly counter-intuitive when most OECD markets have been rising for the past 25 years.

The changing market structure (electronic anonymity, dark pools & crossing networks) has made the understanding of flow far more diffficult. Even large-holder filings can be skirted or are least delayed, all which works to the plungers’ advanatge.

Even in the absence of technical stops, there are clearly times and places where sentiment, soon-to-emerge technical positions (feedback traders), potential supply from holders, exogenuous conditions, yield a an overly-pregnant situation that takes but the gentlest of nudges to get the stone rolling.

Systematic strategies such earnings revision, earnings & price momentum, analyst recommend chgs and policy reactions (busted growth) are playing an increasing role in reinforcement of bear-raid-like strategies. While not the classical BearStearns/HBOS bear-raid, these former are far more prevalent, with similar outcomes.

Most academic research has shown short-sellers (represented by measures of short-interest) generate excess returns over the medium to longer-term, and some recent work ferrets out subsequent news flow to posit they [shorts] possess informational advantage (better research?) if not material non-public information.

Reading (or rather trying to read) the article was a bit of a shock. It’s a bit like the economist joke about a physicist, biologist and economist on a desert island with an unopened can of beans. The economist’s solution is to “posit a can opener”.

These guys seem so far removed from the real world, it’s shocking.

http://alephblog.com/?p=636

PS — you can find a draft of the paper here for free:

http://www.restud.com/uploads/papers/MS-9510-2-submission.pdf