Pershing Square's Ackman says short sale ban hurt

Hedge fund manager William Ackman said on Monday that global regulators rattled investor confidence by briefly banning investors' bearish bets on stocks, and that psychology, not fundamentals, is moving markets.

Ackman, who runs New York-based Pershing Square Capital Management, said the short-selling ban "did more to destroy investor confidence than anything."

Regulators around the world have put restrictions on hedge funds and other investors that sell stocks short -- a bet that a stock price will go down -- to help stabilize cratering financial stocks.

"Short sellers have been blamed for bringing down the market, but since the ban, the markets have been falling even further, which means 'the longs' are selling now," Ackman told reporters in a question-and-answer session after addressing the Value Investing Congress in New York.

On Monday, the Dow Jones industrials .DJI plummeted 800 points before closing down 370 points, or 3.6 percent, to 9950.50 -- settling below 10,000 for the first time since October 2004.

Many hedge fund managers have complained that the ban prevents them from properly hedging their portfolios and has caused many fund managers to suffer heavy losses.

Ackman, an activist investor who has won changes at companies like Wendy's International Inc (WEN.N: Quote, Profile, Research, Stock Buzz) and McDonald's Corp (MCD.N: Quote, Profile, Research, Stock Buzz), said stock prices are getting "extremely cheap" as the market tumbles lower amid worries about sluggish growth.

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