Already banned here from what I had gathered, thought we followed the US on that one actually. The problem is not so much that you benefit from another investor's losses (that always happens when you gain money because of speculation), but that it increases the volatility of the markets.
Originally posted by KazetNagorraWould the increased volatility be enough reason to ban short selling in your opinion?
Already banned here from what I had gathered, thought we followed the US on that one actually. The problem is not so much that you benefit from another investor's losses (that always happens when you gain money because of speculation), but that it increases the volatility of the markets.
How about naked shorting? I believe that naked shorting is illegal but I guess it still happens. Is banning short selling the only sure fire way of preventing naked shorting?
Originally posted by Metal BrainIf the bill is clipped to another one banning you from RHP, I'm all for it.
Australia banned short selling. I think we should consider doing the same. I have not heard a convincing reason to not ban it. It seems like a way to profit from other investor's losses to me.
Should we follow Australia's example?
Originally posted by Metal BrainOne more step toward Socialism, why not.
Australia banned short selling. I think we should consider doing the same. I have not heard a convincing reason to not ban it. It seems like a way to profit from other investor's losses to me.
Should we follow Australia's example?
Originally posted by Metal BrainI don't know enough about these financial constructs to comment on that intelligently.
Would the increased volatility be enough reason to ban short selling in your opinion?
How about naked shorting? I believe that naked shorting is illegal but I guess it still happens. Is banning short selling the only sure fire way of preventing naked shorting?
No short selling should not be banned. Those calling for the banning of short selling are trying to score points politically as, for a while at least, the world blamed short-selling hedge funds for the demise of the banks. In fact short selling is nothing else than taking a bet on an overvalued stock. One particular hedge fund took out short positions on Northern Rock years before it went down the pan. It had correctly identified the Rock as a flawed business. When the shareprice of NR finally crashed it was not because of the short positions but because of a loss of confidence by long investors.
Much was said at the end of last year about the role of hedge funds in running the banks into the ground. In fact, the number of short positions was minute compared to all trades. While shorts can exert some pressure on the share price there is nothing worse than when long investors lose confidence and dump their stock at any price. This is what happened to the banks.
Short selling also provides liquidity.
I cannot think of a single reason for banning shorting apart from political point scoring because Joe Public and the newspapers have declared it an evil practice.
I do not work for a hedge fund.
Originally posted by knightwestWhat about inside information?
No short selling should not be banned. Those calling for the banning of short selling are trying to score points politically as, for a while at least, the world blamed short-selling hedge funds for the demise of the banks. In fact short selling is nothing else than taking a bet on an overvalued stock. One particular hedge fund took out short positions on ...[text shortened]... Public and the newspapers have declared it an evil practice.
I do not work for a hedge fund.
Doesn't this provide a tool for the few people that know the stock market is about to take a dump to profit from it and expropriate wealth from other stock holders?
For example, lets say David Rockefeller knew about the real estate bubble and sold out on them at their peak and invested in short positions knowing the stock market would fall because of asset value adjustments. He rakes in all the money while the rest of us who are in the dark pay for it.
Think about it. The wealth has to come from somewhere. If it doesn't come from other stock holders, then where does it come from? If enough stock holders lease them to short sellers it has to drive the stock value down.
What would happen if all stock holders leased their stock to short sellers? Would the stock be worth anything? I think not.