Kind of incredible, I think, that what started as an internet joke appears to have successfully revitalized a dying company. Indeed, it seems to have created an entire new form of stock valuation, termed a 'memestock'. I wonder if other companies might try to mimic this using guerrilla marketing approaches.
https://www.reuters.com/article/us-gamestop-activist-idUKKBN2B019T
I once created a thread on here called "short selling should be illegal" or maybe is was in the form of a question. It was a long time ago and I still stand by it. Investors buy stock and hold it. Short sellers are not really investors, they are vulture speculators.
Profiting from a stock decline is wrong. There should be no profit from that. It encourages insider trading, encourages people to want a stock decline so they can insider trade and therefor encourage the condoning of disaster when it can be prevented.
Imagine the Austin Powers character "Dr. Evil" saying something bombastic like "I will cause a nuclear war and short sell everything!".
Comedy aside, short selling is fundamentally wrong! It should be illegal.
@metal-brain saidHi MB, here is something we agree on.
I once created a thread on here called "short selling should be illegal" or maybe is was in the form of a question. It was a long time ago and I still stand by it. Investors buy stock and hold it. Short sellers are not really investors, they are vulture speculators.
Profiting from a stock decline is wrong. There should be no profit from that. It encourages insider tra ...[text shortened]... hort sell everything!".
Comedy aside, short selling is fundamentally wrong! It should be illegal.
However the question is how exactly would you go forward to make it illegal? I fear there is a lot of bureaucracy involved in trying to prevent it. ( I thought about it and actually you would have to outlaw the whole concept of selling something you don't win (yet). But that would interfere with a lot of quite useful business to promise delivery of something not produced yet.
@ponderable saidThere must be a contract involved that insures the original owner be paid a specific amount after the short seller is done with it. If the law no longer recognizes these contracts they will not be legally binding. That would mean anybody short selling illegally would have only the word of each other for that specific payment at a certain time. I suspect the owner of the stock would choose to just sell it instead of lending it to a short seller. He or she would have to have a lot of trust in the short seller to repay without legal obligation.
Hi MB, here is something we agree on.
However the question is how exactly would you go forward to make it illegal? I fear there is a lot of bureaucracy involved in trying to prevent it. ( I thought about it and actually you would have to outlaw the whole concept of selling something you don't win (yet). But that would interfere with a lot of quite useful business to promise delivery of something not produced yet.
Lending stock shares is an absurd concept in itself. Either you own it or you don't. That is the way it should be. Lending is dependent on legal contracts. Simply end the legality of such contracts. They never should have been recognized as legal in the first place.
@wildgrass saidohhh, they sure could. my friend.
Kind of incredible, I think, that what started as an internet joke appears to have successfully revitalized a dying company. Indeed, it seems to have created an entire new form of stock valuation, termed a 'memestock'. I wonder if other companies might try to mimic this using guerrilla marketing approaches.
https://www.reuters.com/article/us-gamestop-activist-idUKKBN2B019T
But I should think this would be an obvious case of insider trading. Many such schemes come along and authorities can't catch them all, naturally.
The gold market, as an example, is a heavily controlled commodity market. Things can happen world-wide that determine the market but for the most part, the big boys make the market swings. If you want to buy gold, don't let what I said deter you. You can always sit back and wait for them to make the market swing UP :-)
Hint: wait for gold to have a little crash, then buy it. In the long run, it will always go up.
@Metal-Brain
Investors buy stock and hold it. Short sellers are not really investors, they are vulture speculators.
Yes, they are "bookies" and option trading is for the most part, legalized gambling.
But don't be so quick to flush it. I can show examples where buying calls is for legit reasons. Not sure about puts.
@earl-of-trumps saidInteresting.
ohhh, they sure could. my friend.
But I should think this would be an obvious case of insider trading. Many such schemes come along and authorities can't catch them all, naturally.
The gold market, as an example, is a heavily controlled commodity market. Things can happen world-wide that determine the market but for the most part, the big boys make the market sw ...[text shortened]... )
Hint: wait for gold to have a little crash, then buy it. In the long run, it will always go up.
But with gold, you see all the time people on TV yelling at you to buy gold. That's not insider trading is it?
I don't think it would be insider trading to go on Reddit and make a convincing case for everyone to go buy stock in Staples or something.
@metal-brain saidI don't know enough about it but I always heard short sellers play an important role in helping prevent financial bubbles.
I once created a thread on here called "short selling should be illegal" or maybe is was in the form of a question. It was a long time ago and I still stand by it. Investors buy stock and hold it. Short sellers are not really investors, they are vulture speculators.
Profiting from a stock decline is wrong. There should be no profit from that. It encourages insider tra ...[text shortened]... hort sell everything!".
Comedy aside, short selling is fundamentally wrong! It should be illegal.
@wildgrass -
But with gold, you see all the time people on TV yelling at you to buy gold. That's not insider trading is it?
From them to you, no, not insider trading.
But it's obvious, the selling company is dumping their gold while the price is relatively high.
Note: there is no guarantee that the price of gold falls, the seller could be selling because they need the cash. So be careful
If a BigFarmer told his buddy to buy Pork Bellies futures, how much of his own money would he spend buying TV advert time to tell total strangers how to make a killing buying commodities?
you see? It's all bullshyte. Same thing with gold and silver adverts. Don't listen to them.
-------------------
@wildgrass -
I don't think it would be insider trading to go on Reddit and make a convincing case for everyone to go buy stock in Staples or something.
If Staples dropped heavily in price, there would be an investigation
@earl-of-trumps saidI guess I don't understand insider trading at all. I thought it was just about profiting from knowledge about a company that isn't public.
@wildgrass -
But with gold, you see all the time people on TV yelling at you to buy gold. That's not insider trading is it?
From them to you, no, not insider trading.
But it's obvious, the selling company is dumping their gold while the price is relatively high.
Note: there is no guarantee that the price of gold falls, the seller could be selling because ...[text shortened]... in Staples or something.[/i]
If Staples dropped heavily in price, there would be an investigation
@wildgrass saidAlmost.
I guess I don't understand insider trading at all. I thought it was just about profiting from knowledge about a company that isn't public.
And you don't have to make a profit. Averting a huge loss counts, too, as Martha Stewart showed us. Remember her?
Anyway, insider trading involves a company officer/employee with knowledge of a situation, giving pertinent information to an outsider for them to trade in a way that is profitable,
Martha Stewart got word from the CEO of a company that she had stock in, that the FDA was not going to approve of a certain drug. So on that information, Stewart sold the stock. When the FDA formally made the announcement, the stock dropped badly, and Stewart had averted the loss.
That is basically how insider trading works. It's not too complicated.
Albert H. Wiggin
After the Wall Street Crash of 1929, it was revealed that Albert H. Wiggin, the respected head of Chase National Bank, had shorted more than 40,000 shares of his own company.3
Using companies that were owned by his family to hide the trades, Wiggin built up a position that actually gave him a vested interest in running his company into the ground. At the time, there were no specific rules against short-selling stocks of your own company. So, in the aftermath of the 1929 crash, when many different investors exited their positions of Chase National Bank stock at the same time, Wiggin legally made $4 million.
@metal-brain saidThe market is a very risky space. And short selling is a very risky strategy. The upside is limited but the downside is infinite. As what happened in the Gamestop debacle. Caught in a short squeeze these knuckleheads were up for billions in losses. I'm sure their losses were highly exaggerated though as I doubt they would not have hedged their position with call options or some other hedging strategy.
Profiting from a stock decline is wrong. There should be no profit from that. It encourages insider trading, encourages people to want a stock decline so they can insider trade and therefor encourage the condoning of disaster when it can be prevented.
Comedy aside, short selling is fundamentally wrong! It should be illegal.
Anyhoo as its already been mentioned, its good for the market and is a natural way for stocks to not become too inflated in price, and for bubbles to be routinely deflated.
The real problem that I see, that undermines the participation of the mom and pop retail investor, are the high frequency traders with their complicated algorithms that basically have the ability to milk every last drop of profit out of any significant movement in price. By the time you (average home trader) try to react to some news, the hft's will already have come and gone and you will be picking the bones. But that's another conversation. 😉
@kmax87 saidBubbles still happen. I think you accepted a myth that was fed to you. Why didn't short sellers prevent the dotcom bubble? The real estate bubble of 2008? All the other bubbles?
The market is a very risky space. And short selling is a very risky strategy. The upside is limited but the downside is infinite. As what happened in the Gamestop debacle. Caught in a short squeeze these knuckleheads were up for billions in losses. I'm sure their losses were highly exaggerated though as I doubt they would not have hedged their position with call options or som ...[text shortened]... ll already have come and gone and you will be picking the bones. But that's another conversation. 😉
https://en.wikipedia.org/wiki/Dot-com_bubble
There is no upside to short selling generally. It is just a way for wealthy people to take advantage and profit from their inside information.
If it was revealed that Bill Gates and Fauci made a lot of short selling bets right before the pandemic would it disturb you? What would it take for you to turn against short selling? Anything?
@wildgrass saidWe still have bubbles. Where did short selling help?
I don't know enough about it but I always heard short sellers play an important role in helping prevent financial bubbles.
@kmax87
I'm sure their losses were highly exaggerated though as I doubt they would not have hedged their position with call options or some other hedging strategy.
they did. they bought the stock of the company