short selling is unpatriotic
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ColinRiche
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Trader333 said:
i'm getting the same feeling
Its only been in the recent years that the general public have been able to short the market before then it was only the institutions, banks and hedge funds that were able to sell short.
Ask people on the street if they can make money from a falling market and most will say No.
For the general public being excluded from this practice was totally unfair
The introduction of the Options market made it possible for the public to short, but still most brokers do not offer this.
"Ban shorting" - on the contrary shorting is being allowed more and more.... Warrants have recently been introduced...
And what are warrants if not another way to short stocks on margin... and these can be obtained from your local bank.
The above coments make reference to the UK market more than any other.
stevespray
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Loadsa Dosh - I have to say that you have got it seriously wrong.
Short selling is part of any market, infact, it was the basis of the formation of many of the worlds commodities markets which exsist today.
Do you understand that quite often when you buy stock via a stock exchange the market maker is actually going short in order to supply you with the relevent stock. Does this make you an 'accessory' to the 'crime' ?
It sounds to me rather like you may have recent got burnt on something, care to share that with us ? I well remember back in 1999/2000 in the days of very volitile tech markets many people were playing the different stocks and for the most part making money however there were a few that kept getting burnt on the pull backs and rather than admit that they were wrong they decided to blame the un-ethical short seller !!
Quite frankly if you dont like the rules then maybe its best to play elsewhere. The fact is that short selling will never be completely outlawed because it adds liquidity to the markets.
To suggest that short selling is theft is quite mad, anyone who sells short has the authority of the stock owner to borrow the stock to sell.
Steve.
Short selling is part of any market, infact, it was the basis of the formation of many of the worlds commodities markets which exsist today.
Do you understand that quite often when you buy stock via a stock exchange the market maker is actually going short in order to supply you with the relevent stock. Does this make you an 'accessory' to the 'crime' ?
It sounds to me rather like you may have recent got burnt on something, care to share that with us ? I well remember back in 1999/2000 in the days of very volitile tech markets many people were playing the different stocks and for the most part making money however there were a few that kept getting burnt on the pull backs and rather than admit that they were wrong they decided to blame the un-ethical short seller !!
Quite frankly if you dont like the rules then maybe its best to play elsewhere. The fact is that short selling will never be completely outlawed because it adds liquidity to the markets.
To suggest that short selling is theft is quite mad, anyone who sells short has the authority of the stock owner to borrow the stock to sell.
Steve.
Loada Dosh
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Some very good points made by several of you, and it is clear the quality of the posts here is far superior to many of the boards I’ve visited.
Interesting tactics used to combat and/or discredit the argument I have raised so far.
One line of attack was to question my objection to short selling in the light of my own strategy of averaging down and to ask what I meant by long-term. An excellent question because on other boards I’m always criticising people for ambiguity, especially what they mean by short-term view. In the case of short term-investment predictions, for example, I require at least three pieces of information to make the prediction unambiguous. They are target price, stop loss and date of the expiry of the bet or forecast (most of the time I’m discussing statistical methodologies with spread betters hence the reference to bet). It’s amazing how many people refer to a short-term view without having made a decision on at least those three parameters, it’s little wonder most people lose their hard earned dosh.
My definition of “long-term” covers a broad period for it is dependent on reaching a target price before I start to take profits. I select only shares that I believe are in the ten bagger category, and start to take profits at the five bagger stage.
Briefly, having decided that a particular share meets my ten-bagger or more criteria, I save up until I have enough dosh to buy a tranche in that company. I never borrow to invest. That initial purchase immediately sets a price, the price I have paid and I then think in terms of taking some profits at the five bagger and the rest at the ten bagger stage. This may take years, on the other hand it can happen within weeks. If during that period, be it weeks or years, the price falls below the price I originally bought, I try to average down setting a new, lower average price. I may do this many times. But that is dependent on having the dosh available to do it when the opportunities arise.
So when I talk about “long-term” it would be more accurate to say I’ve conditioned my mind to a long-term investment strategy, if it takes that long to realise my target profits, and if that means three, four or five years, then I’m in there for the long-term. In theory I could wait 19 years, my objective being to retire at 45 and that is the time left to accumulate enough dosh for my early retirement.
The action of shorters can therefore affect the timing at which I take profits and slow me up. For example, with TRK I’ve been averaging down whenever the price fell below my averaging down price and when I’ve had enough dosh saved to buy a tranche. Currently it is three times my averaging down price and I will start to take profits when the price reaches five times the averaging down price. Note that my profit target is constantly adjusted with a changing average price. The actions of shorters may stop the five and/or ten bagger price being reached, or at least delay it so that I do not have the cash available in time to reinvest in other shares where the price has fallen.
Obviously I’d much rather take profits as early as I can so that I can reinvest the cash, it follows that any actions that have the effect of diluting the stock in the market is contrary to my overall objective. Shorters are taking a free ride on my share holding and thereby delaying and hindering me. I don’t like people taking a free ride at my expense and I intend to lobby as hard as I can, with other campaign colleagues, to outlaw short selling.
I hope that helps to explain my personal annoyance at short selling. Of course, the harm and damage extends far beyond my own personal circumstances as it effects companies and indeed the very principles underlying the market. We haven’t really touched on those issues yet, but best to get one thing out of the way at a time otherwise it confuses the discussion.
Which leads me back to my argument that short selling is a form of theft. The arguments that have been presented to counter this statement are not really substantive in my view. It amounts to lots of people saying it ain’t theft, but constantly repeating that mantra without supporting it with a viable argument is really not good enough, is it? Someone did make an attempt by taking an example of hiring a car, but there is no impropriety occurring in that example as there is clear agreement between all the relevant parties. There is big difference between paying someone for the wear and tear on the hired vehicle as opposed to thieving it and returning it later.
If someone shorts a share and its price falls, that may affect the timing of me taking profits. That shorter has not asked my permission or the permission of the thousands of other share holders who own shares as their property and collateral. The comparison to a car thief still holds, as indeed I could make a number of other valid comparisons if it comes to that.
Another line used against my argument, was based on pedantry, namely that a “legal theft” was contradictory. Obviously. I’m not trying to argue that short selling is currently illegal, it ain’t, my argument is that it should be made illegal. Just because it is legal at the moment doesn’t mean to say it is just and right, it is in my view a theft and should be treated as such in future legislation.
By the way, for those people who seem to think the government here and in the US are not considering banning shorting, to them I say dream on, you are in for a big shock! I do agree that suddenly banning short selling would give rise to difficulties, that point was validly made by a poster, but hence the need for transitional provisions and I suspect that is one of the delays holding things up. But it will happen I am sure, the drafting of those transitional provisions only buys a stay in execution.
None of the various arguments I have heard so far stand up to scrutiny, I therefore still believe short selling is de facto thieving.
Interesting tactics used to combat and/or discredit the argument I have raised so far.
One line of attack was to question my objection to short selling in the light of my own strategy of averaging down and to ask what I meant by long-term. An excellent question because on other boards I’m always criticising people for ambiguity, especially what they mean by short-term view. In the case of short term-investment predictions, for example, I require at least three pieces of information to make the prediction unambiguous. They are target price, stop loss and date of the expiry of the bet or forecast (most of the time I’m discussing statistical methodologies with spread betters hence the reference to bet). It’s amazing how many people refer to a short-term view without having made a decision on at least those three parameters, it’s little wonder most people lose their hard earned dosh.
My definition of “long-term” covers a broad period for it is dependent on reaching a target price before I start to take profits. I select only shares that I believe are in the ten bagger category, and start to take profits at the five bagger stage.
Briefly, having decided that a particular share meets my ten-bagger or more criteria, I save up until I have enough dosh to buy a tranche in that company. I never borrow to invest. That initial purchase immediately sets a price, the price I have paid and I then think in terms of taking some profits at the five bagger and the rest at the ten bagger stage. This may take years, on the other hand it can happen within weeks. If during that period, be it weeks or years, the price falls below the price I originally bought, I try to average down setting a new, lower average price. I may do this many times. But that is dependent on having the dosh available to do it when the opportunities arise.
So when I talk about “long-term” it would be more accurate to say I’ve conditioned my mind to a long-term investment strategy, if it takes that long to realise my target profits, and if that means three, four or five years, then I’m in there for the long-term. In theory I could wait 19 years, my objective being to retire at 45 and that is the time left to accumulate enough dosh for my early retirement.
The action of shorters can therefore affect the timing at which I take profits and slow me up. For example, with TRK I’ve been averaging down whenever the price fell below my averaging down price and when I’ve had enough dosh saved to buy a tranche. Currently it is three times my averaging down price and I will start to take profits when the price reaches five times the averaging down price. Note that my profit target is constantly adjusted with a changing average price. The actions of shorters may stop the five and/or ten bagger price being reached, or at least delay it so that I do not have the cash available in time to reinvest in other shares where the price has fallen.
Obviously I’d much rather take profits as early as I can so that I can reinvest the cash, it follows that any actions that have the effect of diluting the stock in the market is contrary to my overall objective. Shorters are taking a free ride on my share holding and thereby delaying and hindering me. I don’t like people taking a free ride at my expense and I intend to lobby as hard as I can, with other campaign colleagues, to outlaw short selling.
I hope that helps to explain my personal annoyance at short selling. Of course, the harm and damage extends far beyond my own personal circumstances as it effects companies and indeed the very principles underlying the market. We haven’t really touched on those issues yet, but best to get one thing out of the way at a time otherwise it confuses the discussion.
Which leads me back to my argument that short selling is a form of theft. The arguments that have been presented to counter this statement are not really substantive in my view. It amounts to lots of people saying it ain’t theft, but constantly repeating that mantra without supporting it with a viable argument is really not good enough, is it? Someone did make an attempt by taking an example of hiring a car, but there is no impropriety occurring in that example as there is clear agreement between all the relevant parties. There is big difference between paying someone for the wear and tear on the hired vehicle as opposed to thieving it and returning it later.
If someone shorts a share and its price falls, that may affect the timing of me taking profits. That shorter has not asked my permission or the permission of the thousands of other share holders who own shares as their property and collateral. The comparison to a car thief still holds, as indeed I could make a number of other valid comparisons if it comes to that.
Another line used against my argument, was based on pedantry, namely that a “legal theft” was contradictory. Obviously. I’m not trying to argue that short selling is currently illegal, it ain’t, my argument is that it should be made illegal. Just because it is legal at the moment doesn’t mean to say it is just and right, it is in my view a theft and should be treated as such in future legislation.
By the way, for those people who seem to think the government here and in the US are not considering banning shorting, to them I say dream on, you are in for a big shock! I do agree that suddenly banning short selling would give rise to difficulties, that point was validly made by a poster, but hence the need for transitional provisions and I suspect that is one of the delays holding things up. But it will happen I am sure, the drafting of those transitional provisions only buys a stay in execution.
None of the various arguments I have heard so far stand up to scrutiny, I therefore still believe short selling is de facto thieving.
donaldduke
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Short selling is not theft there is clear agreement between
the parties. You short a stock you borrow it with permission
from your broker who might borrow it with permission from
somewhere else.
If you dont want your broker to lend out your stock you should
keep hold of your certificates yourself, this way your stock cannot
be sold short.
Now big holders are willing to lend out there shares because
they will earn interest on doing so.
Only a very small fraction of all sales are short sales about 2%.
Banning these will make little difference.
the parties. You short a stock you borrow it with permission
from your broker who might borrow it with permission from
somewhere else.
If you dont want your broker to lend out your stock you should
keep hold of your certificates yourself, this way your stock cannot
be sold short.
Now big holders are willing to lend out there shares because
they will earn interest on doing so.
Only a very small fraction of all sales are short sales about 2%.
Banning these will make little difference.
That shorter has not asked my permission or the permission of the thousands of other share holders who own shares as their property and collateral.
The shorter has asked and received the permission of the stock holder whose stock they have rented (borrowed is the wrong expression as they do have to pay for the priviledge). As such it is not theft, it is a legal rental agreement between the owner and the 'user'.
They have no need to seek the permission of the remaining stockholders as it is - rightfully - none of their business.
Plus, you appear to consider that the existing shareholders want to see the price go up. In many cases stock is only bought so that the owners can then leverage that holding.
The fact that they own some basic stock is just a key to unlock their ability to play in wider markets such as futures, options, CFD's Warrants, stock lending etc.....
The fact that the stock goes up or down in price becomes irrelevant when compared to the leverage which can be obtained against a comparatively small holding, if thge price goes up, then happy days, but it is not a requirement.
The shorter has asked and received the permission of the stock holder whose stock they have rented (borrowed is the wrong expression as they do have to pay for the priviledge). As such it is not theft, it is a legal rental agreement between the owner and the 'user'.
They have no need to seek the permission of the remaining stockholders as it is - rightfully - none of their business.
Plus, you appear to consider that the existing shareholders want to see the price go up. In many cases stock is only bought so that the owners can then leverage that holding.
The fact that they own some basic stock is just a key to unlock their ability to play in wider markets such as futures, options, CFD's Warrants, stock lending etc.....
The fact that the stock goes up or down in price becomes irrelevant when compared to the leverage which can be obtained against a comparatively small holding, if thge price goes up, then happy days, but it is not a requirement.
I think you are only upset because the shorters are spoiling your retirement plan. It's going to take you x amount extra years before you can retire.
If you choose to be a dinosaur that's your problem. Adaptability is the key to survival.
"(most of the time I’m discussing statistical methodologies with spread betters hence the reference to bet)."
Then why would a spread better care anything about your argument. Most shorting of stocks is done via spreadbetting by the general public, so your argument doesn't even apply. Or is it the fault of the Spreadbetting companies by allowing shorting?
The percentage of the public that actually short physical shares is very small indeed. The vast, vast majority is still done by the institutional boys and always will be.
When a share goes down on actual physical dumping of a stock. Most people are giving back the shares they own as they run for the exits because they no longer want to hold that stock at that price.
I have only ever met a couple of people whom have been allowed by their broker to short stocks they do not own; and that is only because they have been big margined traders.
If you choose to be a dinosaur that's your problem. Adaptability is the key to survival.
"(most of the time I’m discussing statistical methodologies with spread betters hence the reference to bet)."
Then why would a spread better care anything about your argument. Most shorting of stocks is done via spreadbetting by the general public, so your argument doesn't even apply. Or is it the fault of the Spreadbetting companies by allowing shorting?
The percentage of the public that actually short physical shares is very small indeed. The vast, vast majority is still done by the institutional boys and always will be.
When a share goes down on actual physical dumping of a stock. Most people are giving back the shares they own as they run for the exits because they no longer want to hold that stock at that price.
I have only ever met a couple of people whom have been allowed by their broker to short stocks they do not own; and that is only because they have been big margined traders.
A shorter drives the price down. The price is perceived to be 'cheap' and long traders jump in to buy, driving the price up - one force pushes down, the other up... it's simple market mechanics, about the only 'gut feeling' against it I would entertain as possibly sensible would be that the oscillations about the 'fair value' would perhaps be of greater amplitude. I think 'fair value' is the nub here - you think the share is worth £2 and are incensed it is shorted down to 50p... well sorry, but who says it's worth £2? If it's overvalued the price will drift down - shorters drive it down faster, that's all - and when the dip goes too low there's a chance to go long and make a bigger profit.
If you want to discuss morals, then surely it's only immoral to short 'bad' companies then? Should we all start shorting tobacco companies and the big multi nationals? If so will we be behaving morally or immorally?
Sorry, but you can't complain you don't like the game being played - you want to trade then fine, but play the game as it is - not the way you want it to be, or you'll end up broke sooner rather than later. If you had a £2 share that did fall to 50p then you made a very bad decision to hold it, I would suggest - it often takes a while to make a share price quadruple.
Banning shorting will only hurt the little guys... the big bucks will have plenty of other ways to make money on the dip.
Dave
If you want to discuss morals, then surely it's only immoral to short 'bad' companies then? Should we all start shorting tobacco companies and the big multi nationals? If so will we be behaving morally or immorally?
Sorry, but you can't complain you don't like the game being played - you want to trade then fine, but play the game as it is - not the way you want it to be, or you'll end up broke sooner rather than later. If you had a £2 share that did fall to 50p then you made a very bad decision to hold it, I would suggest - it often takes a while to make a share price quadruple.
Banning shorting will only hurt the little guys... the big bucks will have plenty of other ways to make money on the dip.
Dave
Loada Dosh
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donalduke & TBS
Not sure I totally follow your drifts here, but sounds an interesting line of thought so let’s try to develop it further. It seems to me you are falling ionto the trap of looking at it from just one perspective. Let’s say I buy 1000 TRK shares and deliver the certificate to a broker who then loans out my property to another broker, let’s call them the second broker. Suppose things go pear shaped and when I want my certificate I discover that my broker can’t give it me back? He can’t give me back my property which I paid for with hard earned dosh because the second broker needs my certificate as collateral to protect the short position. This could happen if the first broker was much smaller than the second.
I haven’t got a title of ownership have I? The certificates are locked away to cover the short position so I have no control over my property, and there is no way the short seller can be forced to release my certificate.
There is no legal rental agreement between me and the user as you make out.
It is a completely inequitable state of affairs, ludicrous and would not be tolerated in any other aspect of commerce.
Not sure I totally follow your drifts here, but sounds an interesting line of thought so let’s try to develop it further. It seems to me you are falling ionto the trap of looking at it from just one perspective. Let’s say I buy 1000 TRK shares and deliver the certificate to a broker who then loans out my property to another broker, let’s call them the second broker. Suppose things go pear shaped and when I want my certificate I discover that my broker can’t give it me back? He can’t give me back my property which I paid for with hard earned dosh because the second broker needs my certificate as collateral to protect the short position. This could happen if the first broker was much smaller than the second.
I haven’t got a title of ownership have I? The certificates are locked away to cover the short position so I have no control over my property, and there is no way the short seller can be forced to release my certificate.
There is no legal rental agreement between me and the user as you make out.
It is a completely inequitable state of affairs, ludicrous and would not be tolerated in any other aspect of commerce.
Loada Dosh
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jpwone
Of course not, but if people want to play this shorting game they can use the option market instead can’t they? There is a basic equitable principle here. Short selling, and I’m not so much thinking of the small players but the large ones, sell shares they don’t own for the purpose of market manipulation. The large players and hedge funds do it so they can buy them back later at a manipulated low price. This process destroys capital creation and damages the company.
So we are now moving onto a second good reason why short selling should be banned.
I find it amazing that so many people tolerate this disgraceful behaviour. Short selling is a device to enable the big players and hedge funds to make profits at the expense of the company and small long-term share holders like myself. A company starved of capital can go to the wall. An absolutely appalling state of affairs.
How can anyone justify such unethical and inequitable behaviour?
...I've proved my case...just on that ground alone.. !!
QED
Of course not, but if people want to play this shorting game they can use the option market instead can’t they? There is a basic equitable principle here. Short selling, and I’m not so much thinking of the small players but the large ones, sell shares they don’t own for the purpose of market manipulation. The large players and hedge funds do it so they can buy them back later at a manipulated low price. This process destroys capital creation and damages the company.
So we are now moving onto a second good reason why short selling should be banned.
I find it amazing that so many people tolerate this disgraceful behaviour. Short selling is a device to enable the big players and hedge funds to make profits at the expense of the company and small long-term share holders like myself. A company starved of capital can go to the wall. An absolutely appalling state of affairs.
How can anyone justify such unethical and inequitable behaviour?
...I've proved my case...just on that ground alone.. !!
QED
ColinRiche
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I suggest you do some research on the subject before you come out with such statements.
Short positions can be liquidated at any time by the broker without prior notice.
Here is one comment from a broker about UK short positions...
I could find a lot more information on the subject but i couldn't be asked - i'll let you do that
Nothing should take away someones right to have an opinion that something is undervalued and make money from it.
And conversely nothing should take away someone right to have a contrary opinion to that, that something is overvalued and make money from it.
At the end of the day the value of a company is written on the share certificate and everything else is pure sentiment.
I could argue that companies profiteer by being allowed to borrow more on the basis of this artificial sentiment and that should be illegal... but i wont
Short positions can be liquidated at any time by the broker without prior notice.
Here is one comment from a broker about UK short positions...
I could find a lot more information on the subject but i couldn't be asked - i'll let you do that
Nothing should take away someones right to have an opinion that something is undervalued and make money from it.
And conversely nothing should take away someone right to have a contrary opinion to that, that something is overvalued and make money from it.
At the end of the day the value of a company is written on the share certificate and everything else is pure sentiment.
I could argue that companies profiteer by being allowed to borrow more on the basis of this artificial sentiment and that should be illegal... but i wont
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Glenn
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Well I can see how your line of argument has managed to convince you yourself LDosh, because you appear to have the habit of ignoring certain facts and inventing others in order to suit your argument.
May I politely suggest that, despite your eloquence and energy, you simply do not understand what short selling is about.
Others have already given a more than adequate explanation of shorting. I will try a slightly different slant, but am only repeating what others have already said.
I have never shorted a share and probably never will. But I don't have a problem with it.
A shorter sells shares IN ANTICIPATION of a fall.
He does not cause the fall per se, it is going to happen anyway assuming he is right. His skill lies in finding those opportunities.
The effect of his Selling is negated when he Buys back to cover.
What you are concerned about, but don't seem to realise it, is the simple act of Selling shares (not shorting).
Selling is what takes a price down and keeps it down.
Someday you yourself will be one of these sellers, as is your right.
You will want to take your profit out of your favourite companies, as you richly deserve to do since you have risked your money with them. But in so doing you will have a negative effect on the share price which other people are still invested in, because you are getting out and staying out.
If you want to see who is causing share prices to fall - look in the mirror.
Glenn
May I politely suggest that, despite your eloquence and energy, you simply do not understand what short selling is about.
Others have already given a more than adequate explanation of shorting. I will try a slightly different slant, but am only repeating what others have already said.
I have never shorted a share and probably never will. But I don't have a problem with it.
A shorter sells shares IN ANTICIPATION of a fall.
He does not cause the fall per se, it is going to happen anyway assuming he is right. His skill lies in finding those opportunities.
The effect of his Selling is negated when he Buys back to cover.
What you are concerned about, but don't seem to realise it, is the simple act of Selling shares (not shorting).
Selling is what takes a price down and keeps it down.
Someday you yourself will be one of these sellers, as is your right.
You will want to take your profit out of your favourite companies, as you richly deserve to do since you have risked your money with them. But in so doing you will have a negative effect on the share price which other people are still invested in, because you are getting out and staying out.
If you want to see who is causing share prices to fall - look in the mirror.
Glenn
stevespray
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Loada Dosh - It's become obvious that you think shares only decline due to short selling - this is not the case. Infact it is not possible to short sell certain stocks as stock lending agreements don't exsist in all stocks - these stocks still move up and down like any other stocks. If you were to see price charts of stocks that could be short sold and charts of those that couldn't I dont think you could tell the difference.
You also seem to be of the opinion, dispite people telling you otherwise, that people who are short selling are stealing someone elses stock - this is not the case, the stock is borrowed with full agreement. The stock borrowed is issued stock and therefore no dilution of stock occurs which seems to be what you have indicated. I'm not so sure about your market manipulation theories either - if someone sells alot of stock then of course there is the possibility that they will cause the price to fall but they have to buy that same amount of stock back at some point which is equally likely to make the price rise - your arguement is founded on the basis that once a price has been pushed lower the seller is allowed to buy back is large position without making the price rise - this assumption is totally incorrect.
It would also appear that you fail to understand how short selling aids liquidity. Anything that causes an increase of volume is likely to cause an increase in liquidity. The stock lending agreements are made between all sorts of bodies including stock holders, the stock exchange, market makers and brokers - so you see, all those bodies see the importance of having short sellers active in their markets. So now I hope you can see that short selling is not theft - ITS THE BORROWING OF STOCK WITH THE FULL AGREEMENT OF ITS RIGHTFUL OWNER.
Steve.
PS The whole arguement reminds me of an episode of Paddington Bear I happened to catch when my friend was staying with his young family. Paddington paid a £5 note into the bank one day and then returned to the bank a few days later, he became most distressed to discover that they gave him back a different £5 note to the one he paid in, Paddington remarked "This isnt the £5 I paid in, my £5 note had a marmalade stain on one of the corners"........The moral of the story is....make sure you understand how markets / goods / services work before you part with your hard earned as it saves you distress in the longer term !
You also seem to be of the opinion, dispite people telling you otherwise, that people who are short selling are stealing someone elses stock - this is not the case, the stock is borrowed with full agreement. The stock borrowed is issued stock and therefore no dilution of stock occurs which seems to be what you have indicated. I'm not so sure about your market manipulation theories either - if someone sells alot of stock then of course there is the possibility that they will cause the price to fall but they have to buy that same amount of stock back at some point which is equally likely to make the price rise - your arguement is founded on the basis that once a price has been pushed lower the seller is allowed to buy back is large position without making the price rise - this assumption is totally incorrect.
It would also appear that you fail to understand how short selling aids liquidity. Anything that causes an increase of volume is likely to cause an increase in liquidity. The stock lending agreements are made between all sorts of bodies including stock holders, the stock exchange, market makers and brokers - so you see, all those bodies see the importance of having short sellers active in their markets. So now I hope you can see that short selling is not theft - ITS THE BORROWING OF STOCK WITH THE FULL AGREEMENT OF ITS RIGHTFUL OWNER.
Steve.
PS The whole arguement reminds me of an episode of Paddington Bear I happened to catch when my friend was staying with his young family. Paddington paid a £5 note into the bank one day and then returned to the bank a few days later, he became most distressed to discover that they gave him back a different £5 note to the one he paid in, Paddington remarked "This isnt the £5 I paid in, my £5 note had a marmalade stain on one of the corners"........The moral of the story is....make sure you understand how markets / goods / services work before you part with your hard earned as it saves you distress in the longer term !
Sorry if some body has pointed this out allready:
Lodadosh- no body is pinching your stock-you are in control.
THE CATCH - The main stipulation here when shorting a stock is that should those original shares suddenly be called upon by the original owner (for example, to be sold), they must immediately be returned and/or covered by the firm loaning out the shares (and that means you really). If replacement shares are not available, or a shortage in the shares occurs, you may be faced with having the stock "called away" from you. When this happens, the only recourse you may have is to buy the stock [immediately] in the open market - regardless of price. As you may be starting to see, shorting has aspects not normally associated with buying stocks.
Lodadosh- no body is pinching your stock-you are in control.
THE CATCH - The main stipulation here when shorting a stock is that should those original shares suddenly be called upon by the original owner (for example, to be sold), they must immediately be returned and/or covered by the firm loaning out the shares (and that means you really). If replacement shares are not available, or a shortage in the shares occurs, you may be faced with having the stock "called away" from you. When this happens, the only recourse you may have is to buy the stock [immediately] in the open market - regardless of price. As you may be starting to see, shorting has aspects not normally associated with buying stocks.
Les Battersby
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LOADA DOSH formerly known as Dundoe Watcher, ggoofball, fifty five yards ahead etc is known as Dumboe and LOADA DROSS/LOSS over at iii
He creates multiple IDs in order to recommend his own posts.
Over the last few years he followed the advice of a bulletin board tipster called Leisure Suit Larry and bought a load of techwreck shares at high prices.
Dumboe recently had a £50 000 paper profit on BTG through his averaging down strategy but lost most of it when BTG crashed 60% because Leisure Suit Larry does not recommend using stop losses. :cheesy:
Dumboe says Stevenage is a great place to live and regularly dines at Starburger :cheesy:
He creates multiple IDs in order to recommend his own posts.
Over the last few years he followed the advice of a bulletin board tipster called Leisure Suit Larry and bought a load of techwreck shares at high prices.
Dumboe recently had a £50 000 paper profit on BTG through his averaging down strategy but lost most of it when BTG crashed 60% because Leisure Suit Larry does not recommend using stop losses. :cheesy:
Dumboe says Stevenage is a great place to live and regularly dines at Starburger :cheesy:
Loada Dosh
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Many of you are attempting well argued replies, but from my perspective your attempts to support short selling are in the main not reasons but excuses. I suggest you read carefully over what you have written and ask yourself is it a reason you are actually giving or is it an excuse?
For example, some of you are going onto a personal attack. It’s one thing to attack me by saying I don’t know what I’m talking about, I should go away and do more research, or that I’ve overlooked something already posted and so on. Fine, I don’t consider myself to be an expert on short selling, if you know one please let me know who it is. Nor do I pretend to have a perfect memory so welcome you reminding me on something I may have missed. And if you consider me to be a fool you are entitled to your opinion. But whatever my level of knowledge engaging in a personal attack amounts to an excuse, it is not a reason that supports your case, it actually weakens it. Think about it.
Rather than go back to the “legal theft” argument, although I’m still happy to field any questions on that, I suggest we now move onto the second reason for banning short selling which I outlined very briefly earlier this morning. Let’s try to look at it in a bit more detail.
Firstly there appears to be an apparent misconception in some of the arguments put forward, some of you appear to be implying a presumtion that the stock market is one of integrity and that both
the buyer and seller "own" the stock they witness in the trade. Why do you make that assumption? What basis have you for it?
I contend that if the trading is not between the rightful owners trading their position the market is false. Particularly, but not exclusively, because the trading is being presented in such a way to give the impression there is more issued stock in a company than there really is. Do you accept my reasoning at least up to this point?
If so, does it not follow that what we have here is a total falsehood. In other words a fraud or fraudulent market controlled by forces that do not really own anything?
I could go on, and develop this further, but I’ll leave it there for the moment to see whether you agree with me up to that point, and more importantly, for those who don't agree , why you don't agree preferably supported with reasons to support your argument and not just excuses.
For example, some of you are going onto a personal attack. It’s one thing to attack me by saying I don’t know what I’m talking about, I should go away and do more research, or that I’ve overlooked something already posted and so on. Fine, I don’t consider myself to be an expert on short selling, if you know one please let me know who it is. Nor do I pretend to have a perfect memory so welcome you reminding me on something I may have missed. And if you consider me to be a fool you are entitled to your opinion. But whatever my level of knowledge engaging in a personal attack amounts to an excuse, it is not a reason that supports your case, it actually weakens it. Think about it.
Rather than go back to the “legal theft” argument, although I’m still happy to field any questions on that, I suggest we now move onto the second reason for banning short selling which I outlined very briefly earlier this morning. Let’s try to look at it in a bit more detail.
Firstly there appears to be an apparent misconception in some of the arguments put forward, some of you appear to be implying a presumtion that the stock market is one of integrity and that both
the buyer and seller "own" the stock they witness in the trade. Why do you make that assumption? What basis have you for it?
I contend that if the trading is not between the rightful owners trading their position the market is false. Particularly, but not exclusively, because the trading is being presented in such a way to give the impression there is more issued stock in a company than there really is. Do you accept my reasoning at least up to this point?
If so, does it not follow that what we have here is a total falsehood. In other words a fraud or fraudulent market controlled by forces that do not really own anything?
I could go on, and develop this further, but I’ll leave it there for the moment to see whether you agree with me up to that point, and more importantly, for those who don't agree , why you don't agree preferably supported with reasons to support your argument and not just excuses.
Patrick Laslett
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This looks like Loada Dosh alias Dundoe Watcher average down etc. etc. that used to inhabit the iii bb ---- yes ?
New name -- same old argument.
Guys this could go on for months if you keep responding!
I have seen it all before
New name -- same old argument.
Guys this could go on for months if you keep responding!
I have seen it all before
