We may infer certain things about your "heavily short" investor who is worried about the destruction of your reputation. ONE// that he wants the markets to go down, as he will then benefit personally. TWO// that he is conflicted psychologically as you -his respected "adviser"- do not share his bearish view (so, his ego needing support, he refers to his "altruism" rather than to his own uncertainty). THREE// that it is his OWN reputation that he fears is under threat. This phenomenon is called "transference" by psychologists. (Psychological tests show over-confidence to be both irrational and widespread; how can anyone be SURE that they are right about market direction?). In human psychology, human actions are seldom as they seem. And where money is concerned, where emotions run high, particularly so. If it turns out he is wrong about the bear, his rational response will be to be less sure of his own ability to predict the future. That may itself be a useful lesson. I fear for him if he is right, however.

David Fuller's view

Thank you for this behaviourally astute email. 

My guess is that most subscribers are aware of the extent to which their own market positions can affect their objectivity.  This is particularly true when holding large (relative to one’s capital), leveraged positions.  We would not be human if this did not challenge our objectivity. 

Self-awareness is essential in understanding and coping with market pressures.  Readers are probably aware of the wise adage: Trade down to your sleep level.  Similarly, our ability to read market psychology effectively first requires a very clear and objective understanding of our own emotions in the markets.