Welcome to Thoughts on the market. I'm Andrew Sheets, Chief Cross Asset

Strategist for Morgan Stanley. Along with my colleagues bringing you a variety of

perspectives, I'll be talking about trends across the global

investment landscape

and how we put those ideas together.

It's Friday, January 29th at 2 p.m. in London.

The global equity market is currently valued around 60 trillion trillion and is composed of thousands of publicly traded companies.

But this week, all eyes have been focused on a small handful of stocks, which happen to have high so-called

short interest. The oscillation of these stocks might make for an exciting story, but why is it causing swings in an enormous $60 trillion market?

Short selling happens when an investor thinks a stock price is too high. They borrow shares they don't own, sell them,

and then hope to buy them back when, eventually a lower price prevails. This is an age-old practice,

and historical accounts of comparable standoffs from a century ago

between those trying to push prices higher and those trying to sell short

still sound like they could have been written yesterday.

Short selling is particularly common among hedge funds, which is the name suggests try to limit their exposure to overall market fluctuations.

Buying stocks they like and shorting stocks they dislike is one way to achieve that balance,

with a goal that both strategies will shift profitably

towards some sort of fair value.

But this strategy isn't without complications.

Consider a scenario where I own a thousand dollars of stocks

offset by a thousand dollars of shorts.

Now consider a scenario where it's a million dollars of stocks against a million dollars of shorts.

...