Last week, I floated a thought: I wouldn’t be surprised if we soon saw an executive order banning short selling coming out of the White House:
Well, it hasn’t happened—at least not in the official, legislative sense. But today my friend Howard Lindzon tweeted something that really hit the nerve I was feeling:
This begs the question: Has Trump essentially implemented a “shadow ban” on short selling, just by threatening to tweet?
Think about it.
We’ve seen this movie before. In 2008, during the depths of the Great Financial Crisis, regulators issued a temporary ban on short selling for 799 financial stocks. It was a desperate attempt to stop the bleeding and restore confidence in the system. But the results were questionable at best. Liquidity dried up. Volatility spiked. And many argued that the move did more harm than good by signaling panic.
Other countries have tried similar moves over the years—especially during periods of extreme stress. France, Italy, Spain, and South Korea all implemented short-sale bans during the 2020 COVID crash. The result? Fear spiked. Traders lost confidence. And most of those markets underperformed their global peers even after the bans were lifted.
So here we are again. In 2025, the idea of an explicit ban on short selling would likely ignite the same wave of fear and finger-pointing we saw in those past episodes.
But here’s the twist: Trump might have found a better way.
Why actually issue an executive order when you can send out a tweet that gets everyone thinking you might? Why pass a rule when you can just scare short sellers off the playing field with a couple of words?
It’s kind of brilliant. Not in an ethical or transparent way—but in a psychological warfare kind of way.
Because in markets, perception is power.
And unlike past bans that tended to stoke fear, this “tweet threat” leverages adifferent kind of fear: FOMO—fear of missing out on a massive rally if and when Trump fires off one of his market-pumping messages.
If you’re short, you now have to ask yourself:
What if he tweets tomorrow?
What if the rumor mill kicks in and I get run over on the open?
What if that was “the low”?
It’s hard to manage risk objectively when you’re constantly worried about someone changing the rules—or just implying they might.
And that’s what makes this version of a short-selling ban arguably more effective than any official one: it doesn’t remove liquidity, it just scares traders into becoming buyers… or standing aside altogether.
So what’s the move for traders like us?
Stay aware. Stay tactical. And remember that markets are driven by both supply/demand and narrative. If the narrative keeps shifting beneath our feet, it’s on us to remain nimble and grounded in our process.
Because this market isn’t just trading on fundamentals or technicals anymore—it’s trading on headlines, tweets, and vibes.
And that’s a game we’ve got to be ready to play.
Sean McLaughlin | Chief Options Strategist, All Star Charts
