For decades, academics have worked diligently to try and understand the concepts of war, and what might drive one faction to attack another. From titles and land to which version of religion is right, people have always found various reasons for their attacks. Now, in a paper titled “Trading on Terror?” authors law professors Robert Jackson Jr. and Joshua Mitts argue that the Hamas raid on Israel was done in the hope of plunging the stock of an Israeli company.
“We document a significant spike in short selling in the principal Israeli-company ETF days before the October 7 Hamas attack. The short selling that day far exceeded the short selling that occurred during numerous other periods of crisis, including the recession following the financial crisis, the 2014 Israel-Gaza war, and the COVID-19 pandemic. Similarly, we identify increases in short selling before the attack in dozens of Israeli companies traded in Tel Aviv.”
Supporting this theory is the fact that no increase in short sales occurred when the Knesset (Israel’s House of Representatives, aka the parliament) passed a controversial law. This is a law that bars the courts from using the rest of reasonableness to strike down governmental decisions in July. This kind of decision caused no spike, thus making the spike just before the October 7th attacks stand out that much more.
Per their study, shorting just a singular Israeli company could have easily yielded millions due to the resulting plunge of their stock market. In this instance, they used major companies and lending institutions as the cornerstone of their short mission. Among them, major banks Hapoalim, Leumi, Discount, and Mizrahi-Tefahot, pharmaceutical firm Teva, and software giant NICE were some of the largest shorted.
From what they found it would make sense as well.
If the US government is using our military assets in our defense, or going after someone, there always happens to be advanced knowledge it might happen, and people trading those shares. Nancy Pelosi has been strongly implicated in insider trading, along with her husband due to her extensive trading following news on computer chips and the Ukrainian conflict.
This kind of evidence provides researchers like Jackson and Mitts support what insider trading for military operations might look like. A valuable tool for the authentication and analysis of pages and pages of trading info. It was mirrored in the aggregate and short term in Israeli markets but was also found in parts here in the US as well.
“For one Israeli company alone [Bank Leumi], 4.43 million new shares sold short over the September 14 to October 5 period yielded profits (or avoided losses) of 3.2 billion NIS ($740 million) on that additional short selling. Although we see no aggregate increase in shorting of Israeli companies on US exchanges, we do identify a sharp and unusual increase, just before the attacks, in trading in risky short-dated options on these companies expiring just after the attacks.”
Going back 15 years in their research, they found the peak of transactions like this happened on October 2nd. During this peak, there were more recorded transactions on that one day than in 99 percent of the other 3,570 trading days analyzed. The Tel Aviv Stock Exchange also had excessive short selling the day before the attack.
Currently, the stock market for Israel has been decimated, and many are concerned that the country won’t recover economically. For Hamas, that is a dream come true. Weakening the economy of Israel as well as causing death and destruction while their shorts make them a quick profit margin, they can’t beat the situation. If anything, it will only further embolden them and other organizations to attempt these kinds of attacks across the globe.