The topic I choose to research on is the effect of short selling on economy. Short selling is when an investor borrows shares of trading security fro his or her brokers, sell the stock immediately, and use the proceeds to buy back the stock at a lower price. Essentially, it is a way for investor to profit when the price of a trading security goes down. Since I am finance major, this topic is highly relevant to me an I want to know more about it.

I first used Google to search for information about short selling. I used the search terms “short selling article.” Google returned a large amount of links, mostly website explaining and discuss the concept of short selling. Many popular articles about the topic showed up. However, when I tried to find scholarly article about the topic, the results were very limited. Most of time, it took me to a site with an abstract of scholarly articles. I then tried using a search limiter such as putting quotation marks around “short selling” and “scholarly articles.” All it returned were sites that want me to pay for the scholarly articles. I guess using Google is great when one needs to get acquainted with new topic and read popular articles, but is very ineffective in find scholarly articles that are relevant to a topic.

Next, I tried using a meta-search engine call called Dogpile. Dogpile displays the combined results from general search engines such as Google, Yahoo, Bing, Yandex. The results were much more comprehensive than Google's own search results. I found everything from dictionary definitions, to articles both explaining in depth on how short sell helps the economy and accusing short selling of bring on the recession we currently live in. But still, this meta-search engine faltered when it comes to scholarly articles. I cannot find one reference to a full texted scholar article. Rather the results were mostly focused on explaining the definition of a scholar articles and short selling, not scholarly articles about short selling.

I then tried Yahoo Directory Service. I was surprised because the search function is very limited. It identified that short selling is part of finance and trading and wants me to further limit the result by click categories after categories. I think the directory service is great for someone looking into a complete new concept because the results goes from broad topic like economics and finance to really specific articles talking about short selling strategies and how to identify stocks that are about the fall in price. However, going through the directory index category by category is very time consuming and not advisable for someone that needs quick information on specific topics. However, I noticed the number of result in the directoy service is significantly lower than the number of results returned by Google and DogPile. Just like Google and Dogpile, Yahoo Directory was not able to find any scholarly articles on short selling, at least not within the Finance and Trading section.

Finally, I used UT Library's Database Service. I was able to browse to the Business section and the browse the Business Compete Database. This database returned a number of scholarly articles as well as popular articles. The only limitation I can see is that to use the database to find any relevant information, the user must be have an introductory understanding of the topic. A person of no knowledge of a topic would find the language in some of the articles confusing and incomprehensible.

The first source I found is a popular article in the New York Times called “HIGH & LOW FINANCE; Questioning The Benefit Of Curbing Short Sales.” Floyed Norris, who is the chief financial correspondent of The New York Times and The International Herald Tribune, wrote this article. This article basically said the limiting shorting selling is bad for the economy because it limits the way people makes money and because of that people will make less money and less likely to consume products. I think that Floyed Norris is a little biased since before he became a journalist, he worked in the financial industry for several years.

The second source I found is also a popular article in the Economist called “Short-selling litigation, an enlightening mistake.” Joseph Schumpeter, who is a columnist for the Economists, wrote this article. The Schumpeter said in the article that short-selling is a mistake because people who know that a security's price will go down will do nothing to prevent it since they have the potential to profit from it. Schumpeter, is an economist so his words would be more credibility then Floyed Norris' s view point in New York Times.

The third source I found is a scholarly article from the Review of Financial Studies called “Price Efficiency and Short Selling” written by two Oxford professors, Karl Sigurdsson and Pedro Saffi. Their view point is that short selling can contribute to the efficiency of the market by bring overvalued stocks and security back to their real price based on the future cash flows of their respected assets. However, they warned that speculators can potential abuse short shelling and cause a health company to collapse. I find that this article is very credible because it identified both view point and the authors of this article are experts in their fields

The forth source I found is another scholar article from the Contemporary Accounting Research Journal called “The Effect of Short Selling on Market Reactions to Earnings Announcements” written by two professors at State University of New York, Binghamton. The article stated that people before a company's earning announcement, people with insider information would short the stock, cause the stock price to drop. The short sellers would then buy up large chunk of the now underpriced stock and make a profit when the stock price rebounds following a positive earning announcement. This article is highly informative and credible because it authors are professors at a prestigious college.

This assignment has been very helpful for me. It taught for how to properly find the credible information on the internet. Now I know that general search engines are great for quick answers, directory are great to get an overall understanding of a topic, and library databases are best use for scholarly discussions.