The ‘Short’ Game with Jim Chanos & 2025 Masters Preview with Ned Michaels

Danny Moses (0:10)

In this episode of On The Tape, I sit down with Jim Chanos, famed short seller, current professor at Yale, who teaches a fraud class, by the way, if you want to enroll in that. We talk about some of his famous shorts, including Enron and Wirecard, what he's currently thinking. You should listen because he talks about IBM. Of course, we touch on Tesla. And as a short seller these days, how do you make sense of kind of a new SEC? You have to depend upon the governor to investigate some of the stuff that you're uncovering. Many more stories to share there with Jim. And let's not forget, it's Masters Week, the best four days of the year for sports, in my opinion. And Ned Michaels, who will be broadcasting from holes 15 and 16, who won on the Asian Tour, who played on the European Tour, has been broadcasting for 10 years, gives us his picks and his insights. And I talked to Ned from time to time on some of these tournaments. I got to tell you, you're going to want to listen to this. And he has some insights from following these guys around for the last few days. So this episode has a little bit of the short game and a little bit of the long game. So let's get into it. Jim Chanos, welcome to the On The Tape Podcast.

Jim Chanos (1:10)

Thanks for having me, Danny.

Danny Moses (1:12)

Well, we planned this before this latest debacle in the markets. But it's amazing when the tide goes out, people actually start doing, obviously, bottom up work. But I want to start, you're a big history of the markets. When you look up famous short sellers, it's Jesse Livermore, and then it's Jim Chanos. Just FYI, I happen to do that. And you've seen a lot in your time, but just I know you don't really trade the markets per se. But I would just love to get your thoughts here on what you've seen unfold over the last few days and how you think it resolves itself at all. And then we'll talk about how you would play that.

Jim Chanos (1:43)

So first of all, I hope I don't end up like Jesse Livermore, but okay.

Danny Moses (1:46)

I said famous short sellers, not infamous short sellers. Right, sorry.

Jim Chanos (1:50)

Famous short sellers is a really low bar, though. I mean, as a partner of mine, I used to quip. It's what we call the toughest guy in France. I mean, it's a really, really low bar. In any case, I'm happy to be here. Yeah. So look, markets, I've learned in my 40 years of doing this, in terms of running money and 45 in terms of researching the short side and running money, market levels are inherently hard to predict. Predicting the future is very hard. However, we do know that there are periods where the risks are greater and the risks are less. That when the risks are greater, if something does go wrong, you stand a far better chance of damaging your portfolio on the long side. And for the last year and a half, really, I thought that the risks were getting really elevated. In terms of valuations, speculation, we had kind of a reprise of what we saw in 2021, which was the most speculative market I've seen in my career.

And by post-election 2024, January 2025, we're starting to see the same type of behavior. Stocks going parabolic, mass speculation in crypto, or belief that politics was now solved to the upside. And all you needed was a pin to find the balloon. And the pin showed up kind of as advertised, quite frankly. I mean, the whole idea of upending the economic, or the framework we've had since World War II, and putting in tariffs and other controls, is something that Trump ran out. And I think that because it didn't happen at great length in the first Trump administration, people just thought, oh, well, you know, he'll be controlled by people who will tell him, this is crazy. And in fact, we know that that, you know, didn't happen.

Danny Moses (3:49)

We're gonna get into single stocks and how you think about shorting stocks and what makes you do that. But let me ask you a question, because beyond all this, kind of the fabric of the US is certainly being tested, us as a trusted partner. But within all of that, in order to really short a stock and feel like you'll be vindicated and validated, you need securities laws in place to make sure that what you're seeing gets enforced. And so just with the small changes we're already seeing at the SEC, probably not as small as we think, probably bigger in the DOJ, you know, you are great at identifying fraud. And we're going to go down history lane here in a few minutes. But give me your thoughts now as a short seller that's in the market, since there's literally like 10 of us left at this point, how you would change the way that you approach it, given that you now have to factor something technical in versus fundamental.