Selling a share into a market if you don’t take the risk to go long first ain’t right. It undermines what markets are designed to do which is the creation of capital. Selling short is unpatriotic and I hope it will eventually be banned.
Shorting provides increased liquidity to the markets,
and increased liquidity is always good for the markets.
Lets say someone wants to buy a large amount of some stock,
now if there arent any sell orders around the buyer is going to
have to move the market inorder to bring out sellers. However
if shorting is allowed there will more sell orders and the price
wont need to move up as much for order to get filled.
So shorting is good for those who want to buy and not a bad
Ouch! I guess someones managed investments aren't doing too well then.
I made a stack of money over the last few years by shorting. Thanks for your inevitable donation. I just wish I hadn't squandered it all away. Never mind, more where that came from - I'll just go and short some more.
Just remember this. If it wasn't for my likeness of shorting stock, people like you would have to pay a premium for your long only positions. Shorting provides valuable liquidity to any market place.
Are you referring to US stocks or stocks in general ?
If shorting stocks became banned all that will happen is that everyone would switch to trading single stock futures. The liquidity seen in current stocks would cease making trading much less likely and trading would diminish which in itself is counter to the US policy of commerce.
I have seen a few articles where congress is being lobbied to do this but it will prove counter productive as, in my own case and thousands of others, I just wouldnt trade stocks any more and switch back to futures.
I think they always blame the Shorts after every market downturn:
they blamed the Shorts in 1929 in 1973 in 1987 and after
the recent the dot com bubble.
They didnt outlaw Shorting then, and i cant see them banning
I think people like Loada Dosh need to realise that stocks would
still go down hard on bad news even if shorting was banned.
Infact things could be even worse, atleast now you get some support on bad news when shorts come in and actually buy on bad news to take profits...
Trading is about making money, trading money, the vast majority of business entities manipulate, exploit situations,nations individuals, to make money shorting also cheapens a security to price levels which institutions and other investors find presumably? even more attractive fundamentally, enabling them to pound cost average their investments, giving joe public a presumably better return over the errr, longer term?
There are plenty of patriotic institutional big wads who will eventually come onto the bloodied streets and start mopping up all over again.
Capitalism in the west is all about making money, we have to learn to master that, to do our bit for our country, so its ok to be net short to make money, because eventually it flows back in one direct or eventual indirect way.
Since when has the stock markets primary purpose been to 'create' capital? It's purpose is to raise capital intially then act as a market place for buyers and sellers to exchange money for equity within a company.
Shorting simply increases the pace at which the market finds an equilibrium price between buyers and sellers because the inequality in the spread of information has been narrowed and the number of people able to act on the information has increased.
What a joke, seems propaganda stills works very well these days.
One thing I like about the shorts is when they lose or get squeezed they take their losses like men and don't go blaming everyone and anyone in sight.
Contrast this to the longs back in 2002 when the market was dumping;
'it's the shorts that mess it up for everyone'
'shorting should be banned'
'if it wasn't for the shorts then this market would be 1000 higher'
'it's just not fair that the shorts can take control of the market etc'
You don't see the shorts wingeing these days do you. I myself had some nasty losses late last year when I got squeezed badly and you know why I lost? Because I got it wrong, pure and simple - I don't go blaming anyone apart from myself.
Shorting is here to stay and if they ban it then don't worry the banks/brokers will come up with some tool that will still enable people to short because there's too much money involved for everyone involved.
There are a few interesting points being made here.
In his only other post Loada Dosh has effectively said that he uses pound cost averaging when markets decline and Shorting makes this much more viable.
If shorting were not permitted, I am convinced that market collapses would be much much worse with the decline in prices going even further down. Why ? precisiely because of what others have siad and that is shorts have to buy back and this creates support levels that would just not exist if shorting were banned so a market in decline would most likley continue.
Also unlimited Shorting is not permitted anyway so once a certain percentage of stock has been shorted then no more is allowed.
jees, and I thought the Age of the Dinosaurs was over..
patriotic... surely its more patriotic to short a share down to its decent value, enabling your fellow countrymen to buy at honest prices. Selling your shares at an overvalued price to fellow yeomen seems quite unpatriotic...
send for David Attenbourgh, theres a mini series here
Forgive me for saying this, but most of you can't see the wood from trees and appear to be motivated by greed rather than looking to the benefits of a company and this country, by which I mean the UK, as a whole.
The old argument about liquidity has been spouted out again but that argument was long ago discredited because although there is an increase in the liquidity the overall cost and damage is huge.
Consider the following consequences of short selling.
Firstly, short shares are added to the available outstanding shares, this causing a huge dilution by the market not the
The company's shares are already set in stone, so the outstanding share count increases with each short selling position that is performed.
The company has lost control over the amount of stock out in the market, but the short sellers do. The legal documents that control the amount of capitalised shares in a company are therefore distorted. There has been an increase liquidity but that is no good for long investors.
In other words, short selling is a means by which people can legally steal other people's shares, and use those stolen shares to gain by pre-selling those shares. It is therefore a way of manipulating a downward market and reduce the value of the rightful owner's shares.
Come on guys, it is Sunday, be honest, your motives are purely that of greed and not the interests of people going long or yhe best interests of this country.
Your liquidity argument is nothing more than your conscience trying to justify an act of legal theft!
[Mod's note: 3 point warning for flamming - inciting an argument on the forums]