This ban on naked shorts looks like it is helping companies / the economy, but who is it hurting?
This ban on naked shorts for some is good, but there must be smaller companies who are affected by people shorting their stock in place of not being able to short the companies on the ban. Doesn't this hurt smaller banks?
Answers
273 points
TBone answered 4 months ago …
Yeah definitely, selectively limiting the flows of capital (in ANY industry...think of the US price freezes in the 1970's) will help some and inadvertently hurt others. In my opinion short selling is only good for generating trading commissions for wall street brokerages. it doesn't add liquidity to a market or direct flows of capital to new businesses. It really is a "product" of sorts designed by wall street...same with mortgage backed securities, you know, the instruments that wreaked much of the havoc at the banks/brokers this year. Those were invented by Wall Street to generate fees...not to help markets.
Read more from TBone flag as abuse great answer
209 points
MichaelShulman answered 4 months ago …
Naked short selling has been contrary to SEC regulations for a long time and the latest measures were simply to enforce rules that already exist, but that doesn't mean they didn't hurt legitimate short sellers.
I believe naked short selling is wrong -- it will truly end when someone goes to Allentown Federal Prison -- and it is probably in the best interest of the country that the crackdown occurred. But the move was completely unexpected and temporarily hurt traders who buy put options to play the short-side of ailing companies.
Buying puts is much safer than naked short selling, and I'm actually writing a book (due out in mid-March) on why and how we do what we do in my ChangeWave Shorts service. This drama in the broader markets prompted me to include a chapter on how to properly short stocks.
484 points
warren answered 4 months ago …
It's funny that the people responsible for most of the naked short selling, the large financial institutions had their stocks beaten down so much and deservedly so in my opinion. They then, since they basically run the SEC, had a ban on naked short selling put on OLY THEIR COMPANIES. It's not representative of a free or fair market.
To get a fair shake in todays market is very difficult but underlying conditions will prevail and the loger they are suppressed the higher they will go eventually.
The most prevalent sector being hurt by naked short selling is mining shares. Not a peep from these crooks on that. Why don't they follow their mandate and regulations and ban naked short selling by actually enforcing it.
These crooks realy piss me off and they should be put in jail regulators and all.
Sorry for the emotions but it jus doesn't make sense...unless you live in a socialst country! Do we?
Warren,
www.preciousmetalstockreview.com
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