Banks and Brokers: Short Interest vs Performance

Given the continual increase in write downs for the brokers and banks, we looked to see if investors were increasingly betting against the stocks in terms of short interest.  Below we graph the YTD change in price versus the YTD increase in short interest for some of the major players involved in the credit crisis. 

While Citigroup (C) and Merrill Lynch (MER) are two of the companies highlighted that have been hit the hardest (both are now leaderless), short interest in the companies has seen only modest increases on a relative basis.  As of the end of October, short interest in these two stocks increased by less than Goldman, which is still up on the year.