'On the Monday morning after the story broke, Bank of Ireland's share price started to fall. After three days of trading, it was down 15%. Abbey's share price on the other hand shot up by around 10% within a few days of the news breaking,' the newspaper reported, describing the situation as 'a short seller's dream'.

Announcing that the UK's Financial Services Authority is considering obliging fund managers to report what short positions (effectively, bets that the value of the share will continue to decrease) they have taken in a company's stock, the newspaper outlined the potential dangers of this kind of activity for ordinary investors in Ireland.

'The whole issue of short selling may not be that prevalent in the relatively small Irish market,' it observed. 'But many of the share deals in big Irish companies like Bank of Ireland are done in London, or out of London. In a scenario where a company like Bank of Ireland is out there and looking a bit foolish with a merger approach, the short sellers can basically drive the price down in a very aggressive way.'

Concluding that in the current investment climate, investors are twitchy, and are looking for a reason to sell, rather than to buy, the Independent warned, however, against immediately reacting to every bit of bad news, arguing that:

'We often see the price recover as the market digests the realities again. The bears are still out there, and the impact that anonymous hedge fund managers can have on the value of your investments should not be underestimated.'