Why Dissenting Opinions Are So Important

The line between gambling and investing has had important policy implications. That line also has much to teach about the value of dissent.

Dissenting opinions pull well-meaning people back on track. Photo by Issy Bailey on Unsplash

Dissenting opinions are unpopular, especially in finance. Most investors like to support rising investment prices. People who short stocks are scorned as pessimists who ruin the high prices of optimistic investors and the reputations of strong companies.

However, people who short stock also reduce the size of bubbles. The Great Depression was caused by investors pushing prices higher, not speculators dragging prices lower.

Short-sellers are a subset of speculators, investors who funded risky investments. Investing in unexamined real estate or buying too many stocks on margin also contributed to the 1929 stock market crash.

The history of speculation offers three lessons that can be applied anywhere:

• The value of dissent

• How hedging is different from speculating

• Historical baggage can keep us from correcting problems