# Should shorting be suspended/banned?



## sam76

pretty simple question really...

let's say world wide...


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## Bushman

Stuff shorts. Ban excessive leverage on ASX-listed companies.


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## white_goodman

how else would i make money atm?

it helps give better indications to value to shares


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## a5e0i

I'm a nervous trader and love to trade spreads. Without shorting I don't think I'd be able to play the game.


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## wayneL

Bushman said:


> Stuff shorts. Ban excessive leverage on ASX-listed companies.



Yep that's more to the point.

Banning shorts would cause more selling. Why?

Because option market makers need to be able to short shares to balance their greeks.

Without short selling, MMs would have to lift option IVs to ridiculous heights to account for the additional risk they take on.

This will make puts too expensive a hedge for portfolio holders and they will be more inclined to sell than hedge.

Be careful what you wish for.


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## wayneL

...also no short covering rallies.

Shorting actually supports prices folks, as discussed elsewhere on this forum.


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## mit

Who are the clowns who voted yes?


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## Smurf1976

As with any game, changing the rules once one side starts losing isn't exactly fair. At best, it would further harm the credibility of markets at a time when that really wouldn't be helpful. 

Just like changing the rules half way through a sports game, it makes the whole thing look like a farce.


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## Awesomandy

A suspension or a ban is definitely too much, I think, however, some sort of a control would be good. I mean, we can still make money, but it's probably not a good idea to be able to just short companies into oblivion.


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## korrupt_1

The market must be a balanced system for it to work correctly...

With only buyers allowed to take new long positions, the market will grow at an unhealthy rate. Bring in the shorters and it will normalise the growth and keep the market under a reasonable fair value...


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## Garpal Gumnut

Its an accepted market practice.

gg


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## Whiskers

sam76 said:


> pretty simple question really...
> 
> let's say world wide...




No not that simple. I'd be happy just banning 'naked' shorts.



Bushman said:


> Stuff shorts. Ban excessive leverage on ASX-listed companies.




Ban excessive leverage per se. But don't ask me yet what is an 'excessive' level.


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## wayneL

Some of you are missing the point. Shorting does not cause the market to go down. Ordinary longs selling out causes the market to go down.

For the thousandth time, shorters MUST BE BUYERS again at some stage. Ordinary sellers may sell and NEVER BUY THAT STOCK AGAIN.

Shorters cause upward pressure, not downward


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## Kauri

Looks like the FSA has seen our poll and is casting its vote..

The latest headlines out of the UK have reported that the FSA will ban short-selling of financial stocks from midnight local time on Thursday under rules drawn up by the FSA. The ban will remain in force until January 19, 2009 at which point the FSA will publish official rules on short-selling. The ban is in response to growing calls from investors and authorities to implement policies that will mitigate the current financial markets turmoil. They are also opening a stall on High St. selling second-hand Bandaids..

Cheers
...........Kauri


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## Kauri

DJ is reporting that CALPERS will no longer lend out shares of Goldman and Morgan Stanley. The FSA announced today that they were putting a ban on short selling of UK financial stocks. Meanwhile SEC"s Cox is nowhere to be seen, with no uptick rule and essentially no restraints being made on short sellers. At least some hedge funds will be making some money in this. *Try doing your banking at your neighborhood hedge fund Mr. Cox.*
    The DJIA is up 122 pts and the dollar has recovered slightly on word that at least somebody somewhere is taking steps to stop the madness in the financial sector.

Cheers
...........Kauri


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## mit

I remember reading somewhere that nobody has ever shown that shorters were responsible for driving the price of a stock down


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## freddy2

For those who say yes, are we also to ban going long during bubbles?


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## Aussiejeff

From the horses mouth overnight....

_"*New York on Thursday began a probe into possible illegal short-selling in the stocks of Wall Street companies such as Goldman Sachs Group Inc and Morgan Stanley, Attorney General Andrew Cuomo said*.

Cuomo said on a conference call with reporters: "I want the short-sellers to know today that I am watching. If it is proper and legal then there is nothing to worry about."

He said his office was concerned about destabilization of financial markets, which are suffering their worst crisis since the Great Depression of the 1930s.

The New York State prosecutor said his office also would look back into illegal short-selling that may have occurred in stocks of Lehman Brothers Holdings Inc and American International Group Inc, two companies at the heart of the crisis.

In the past week, Lehman has gone bankrupt and the insurance giant was rescued by the U.S. government.

"This investigation will not only encompass short-selling of Lehman Brothers and AIG but also short-selling in other companies that may be occurring, like Morgan Stanley and Goldman Sachs," Cuomo said.

The prosecutor said he believes *the SEC should freeze short-selling of financial sector stocks on a temporary basis, perhaps for 30 days*.

In a statement, *Morgan Stanley welcomed the investigation to uncover improper short-selling of financial stocks*."_

Full article here....

http://www.reuters.com/article/newsOne/idUSN1834283220080918

Seems to be some concern that a significant proportion of shorts were of the "illegal" variety.

In the meantime, DOW up over 400pts (shorts covering??) )


aj

Also just found this - SEC rules now confirmed?

http://compareshares.com.au/show_news.php?id=S-516056


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## Datsun Disguise

Seems the stick is being pointed at those 'nasty' hedge funds and their shorting practices instead of the true problem of easy credit in boom times. The US system encourages huge risk taking, and in boom times you'd be a mug not to join in - but the bubble will always get too big and then you get what we have now.
The existence of shorting just gves everyone the chance to punish a stock, holder or not. I do struggle with the concept of selling something that I don't actually own and I do think it can open the market up to manipulation. Should shorting exist at all? Hmm my gut says no, should we ban it now? Definitely not, but perhaps the rules need to be tightened, instances of manipulation should be looked at closely so that the rules can prevent them in future. And for crying out loud, if people are cheating then throw em in jail!!!


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## CanOz

Aussiejeff said:


> From the horses mouth overnight....
> 
> _"*New York on Thursday began a probe into possible illegal short-selling in the stocks of Wall Street companies such as Goldman Sachs Group Inc and Morgan Stanley, Attorney General Andrew Cuomo said*.
> 
> Cuomo said on a conference call with reporters: "I want the short-sellers to know today that I am watching. If it is proper and legal then there is nothing to worry about."
> 
> He said his office was concerned about destabilization of financial markets, which are suffering their worst crisis since the Great Depression of the 1930s.
> 
> The New York State prosecutor said his office also would look back into illegal short-selling that may have occurred in stocks of Lehman Brothers Holdings Inc and American International Group Inc, two companies at the heart of the crisis.
> 
> In the past week, Lehman has gone bankrupt and the insurance giant was rescued by the U.S. government.
> 
> "This investigation will not only encompass short-selling of Lehman Brothers and AIG but also short-selling in other companies that may be occurring, like Morgan Stanley and Goldman Sachs," Cuomo said.
> 
> The prosecutor said he believes *the SEC should freeze short-selling of financial sector stocks on a temporary basis, perhaps for 30 days*.
> 
> In a statement, *Morgan Stanley welcomed the investigation to uncover improper short-selling of financial stocks*."_
> 
> Full article here....
> 
> http://www.reuters.com/article/newsOne/idUSN1834283220080918
> 
> Seems to be some concern that a significant proportion of shorts were of the "illegal" variety.
> 
> In the meantime, DOW up over 400pts (shorts covering??) )
> 
> 
> aj




I can just imagine the other wall street buddies cringing at that MS comment.....they all naked short sell, what a load of crap. As if GS and MS wouldn't be in there digging the knives into the other brokerages! The media buys it because its easier to explain as a reason for drops in stock prices and they do this every time there is a significant correction.

The fact is that the SEC cannot do anything to stop the bleeding but are under pressure to do something from that clown Bush and his mates. 

The US likes it's markets functioning when it suit's them. They're always saying "let the markets decide", and yet this year we've seen more meddling in markets than ever before. What a bunch of incompetent hypocrites.

CanOz


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## Trembling Hand

Datsun Disguise said:


> I do struggle with the concept of selling something that I don't actually own




Its just a loan. Do you struggle with the rest of capitalism?


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## Whiskers

Aussiejeff said:


> Seems to be some concern that a significant proportion of shorts were of the *"illegal"* variety.
> 
> 
> 
> aj




That's my point also, that seems to be lost by some.

Naked shorts that don't settle in the proper time or fail to eventually settle at all causes excessive downward pressure before they are bought back.

A few cowboys seem to be forcing the hand of lawmakers to intervene.

http://www.investopedia.com/terms/n/nakedshorting.asp


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## Trembling Hand

Of course Whiskers you have checked your facts and know what amount of transactions fail to settle and weigh that against turnover to determine that it IS a significant amount to manipulate prices.......


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## Bushman

Whiskers said:


> Ban excessive leverage per se. But don't ask me yet what is an 'excessive' level.




ASX/ASIC should have LVR and ICR on all ASX listed industrial and financial stocks. And these should be on a 'look through' basis so it captures the CNP, BNB, AFG's and the like. Straight forward I would have thought and it is what the Financial Regulators require of the banks in Australia already. 

And yes I know this is what auditors are meant to do but they have repeatedly failed. Lets face it - this has been a systemic failure of the audit industry once again (as well as the head-lines attributed to the ratings agencies). 

This is how the debt side of things works. Why not the equity?

The other bit of regulation I would like to see is over pay packets. The model should reward solvency first, then outperformance! It should never, ever be based on market cap and it should be based on long-term profitability, not year-by-year. You should *NOT *be rewarded for betting the farm.


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## Datsun Disguise

Trembling Hand said:


> Its just a loan. Do you struggle with the rest of capitalism?




ha ha ha Recently very much so!!!

It's more than a loan though when you are borrowing from people who do not know that you are borrowing from them (Opus dei, opus mentus - ah thats right opus prime, we seem to have forgotten about that one)


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## Whiskers

Trembling Hand said:


> Of course Whiskers you have checked your facts and know what amount of transactions fail to settle and weigh that against turnover to determine that it IS a significant amount to manipulate prices.......




So I suppose you have proof that it's not happening eh TH? 

Some of you guys are hell bent on playing up the systemic failure of governments in the economic sense, but oh what... they have not stuffed up the regulation of the trading system. 

Unfortunately, I'm not privy to all the necessary data as I'm sure you are not either.

The point is TH, if you are playing by the rules and everyone else is playing by the rules your consciones is clear... it'll all be a big non event, won't it.

Geez some of you guys are so touchy about your precious trading systems.


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## Whiskers

Bushman said:


> ASX/ASIC should have LVR and ICR on all ASX listed industrial and financial stocks. And these should be on a 'look through' basis so it captures the CNP, BNB, AFG's and the like. Straight forward I would have thought and it is what the Financial Regulators require of the banks in Australia already.
> 
> And yes I know this is what auditors are meant to do but they have repeatedly failed. Lets face it - this has been a systemic failure of the audit industry once again (as well as the head-lines attributed to the ratings agencies).
> 
> This is how the debt side of things works. Why not the equity?
> 
> The other bit of regulation I would like to see is over pay packets. The model should reward solvency first, then outperformance! It should never, ever be based on market cap and it should be based on long-term profitability, not year-by-year. You should *NOT *be rewarded for betting the farm.




I certainly concur there too, Bushman.


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## Trembling Hand

Whiskers I have no probs with more regulations to sure up short selling. None at all. But you suggested that the tiny amount of unsettled trades (I will try and fine the data but from memory its absolutely minuscule) were causing "excessive downward pressure". Is that right??


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## Whiskers

Trembling Hand said:


> Whiskers I have no probs with more regulations to sure up short selling. None at all. But you suggested that the tiny amount of unsettled trades (I will try and fine the data but from memory its absolutely minuscule) were causing "excessive downward pressure". Is that right??




What I'm saying is if the three day settlement rule isn't being strictly adhered to, ie if some, even only ocassionally let it ride out to four or five or whatever days, on top of those that do not settle, it ought to be prosecuted as improper conduct or manipulating the market as the case may be.


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## Trembling Hand

Ok fair enough. What about Commsuc and the like letting punters purchase stocks without any cash?? People are day trading on T3 without any need to have dollars in their account? How nutz is that.

Commsuc should be shot!!


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## Whiskers

Trembling Hand said:


> Ok fair enough. What about Commsuc and the like letting punters purchase stocks without any cash?? People are day trading on T3 without any need to have dollars in their account? How nutz is that.
> 
> Commsuc should be shot!!




Agree there. Was very surprised to hear that was happening.


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## noirua

I think we are coming to the time when other countries follow the UK and suspend shorting in certain sectors for a set period.

The ASX could/should be given powers to suspend
 shorting in any stock for a period of up to three months.  Even to the extent of freezing all short contracts that are in place.


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## Timmy

Sorry, its a bit late now, but maybe should be on the table for future debate.  I think the interests of Australia's mum and dad investors would have been best served by banning being long over the last few weeks.


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## freddy2

noirua said:


> I think we are coming to the time when other countries follow the UK and suspend shorting in certain sectors for a set period.
> 
> The ASX could/should be given powers to suspend
> shorting in any stock for a period of up to three months.  Even to the extent of freezing all short contracts that are in place.




Ridiculous, would you be happy for the ASX to also suspend going long certain shares because the price has gone up too much. 

Looks like the incompetent/corrupt/greedy company directors and investors are being successful in deflecting blame onto others (eg shorters) for losing huge amounts of money.


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## Timmy

freddy2 said:


> Looks like the incompetent/corrupt/greedy company directors and investors are being successful in deflecting blame onto others (eg shorters) for losing huge amounts of money.




Yep.


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## noirua

freddy2 said:


> Ridiculous, would you be happy for the ASX to also suspend going long certain shares because the price has gone up too much.
> 
> Looks like the incompetent/corrupt/greedy company directors and investors are being successful in deflecting blame onto others (eg shorters) for losing huge amounts of money.




In my view, "GUILTY AS CHARGED!"


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## nomore4s

freddy2 said:


> Ridiculous, would you be happy for the ASX to also suspend going long certain shares because the price has gone up too much.
> 
> Looks like the incompetent/corrupt/greedy company directors and investors are being successful in deflecting blame onto others (eg shorters) for losing huge amounts of money.




lol, yep the media and general public have fallen for it hook line and sinker.

This correction is purely because of unregulated short selling, nothing to do with fundamentals or big companies losing billions and going broke - I mean why would that drive share prices down.


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## Bushman

Timmy said:


> Sorry, its a bit late now, but maybe should be on the table for future debate.  I think the interests of Australia's mum and dad investors would have been best served by banning being long over the last few weeks.




LOL, yes that's it, ban investing. Then no-one will ever lose any capital!


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## awg

I dont think short selling should be banned, it is an integral part of the system

however it seems that some aspects, such as trustees renting out stock, unbeknown and at at detriment to the beneficial owners and other more extreme methods should be examined with a view to possible regulation.

my view is that in any society, the greater good is an overriding consideration.

if a certain financial engineering method can be utilised by a very few sophisticated users to profit at the expense of the vast majority, and especially damage, then it needs examination...like any other business method...raping the "community" is usually dealt with in some way by restriction.

I dont think this is too naive.

it would also apply to other practices such as highly leveraged multiple CDS, the aim being to make a mega profit, and often to pay very little tax, if u are a multi national corp.

anyone knows that 99% leverage is extremely risky...it seems to me to be a failure in regulation to allow over $60 trillion in CDS to be leveraged up like this.

I try to use commonsense tests in my investments..ie a stress test..what if the market goes down 20%..40% etc.

so 99% leverage( on massive positions) fails that test on a number of grounds, including illiquidity in a volatile market, tha fact that 20%+ falls are commonplace, and the obvious fact that hedging can fail in a number of different ways, especially counterparty failure.

the fact that much better brains than me have failed miserably is little consolation


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## Timmy

awg said:


> if a certain financial engineering method can be utilised by a very few sophisticated users to profit at the expense of the vast majority, and especially damage, then it needs examination...




Are you referring to short selling as being financial engineering and only available to few sophisticated users?  Short selling is actually very straightforward and requires only a little thought, it is also available to anyone with a reasonable grasp on the subject.  All relevant information can be found on public forums, like this one.

The recent turmoil is a failure of regulation, not a result of short selling.


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## tech/a

*This is what your after guy's*

*THE TRILLION DOLLAR SECRET*




http://www.cornerstoneri.com/comments/TrillionDollarSecret.htm


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## deadset

I understand how it works on a very basic level, and even then it just seems wrong.

*If you own a stock*, why would you want someone without your knowing, to borrow it in order to sell it, in order to drive the price down ?

If someone owns a stock, and they decide to sell thinking it will go down, then when they rebuy at the bottom, they've saved themselves money and they are using their own stocks that they own.

If I own a stock, I definitely do not want somone getting their grubby hands on it to sell down on me, buy your own shares, don't use mine.

Naked shorts, I'll have to grasp the concept better, I just don't see how this can be possible, its got zero risk if I understand it, because the person can then decide, nah I didn't want to short it afterall if he decides to after the event and its not in their favour.

In any case, I'll take the comments in favour of shorting on board, particularly WayneL's comments, as I happily admit that I don't fully understand how it all fits together.

As I understand the Australian market has had to suspend shorting on a few occasions over a long history.

I know the holders must be happy with people shorting, because they win either way.


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## freddy2

deadset said:


> *If you own a stock*, why would you want someone without your knowing, to borrow it in order to sell it, in order to drive the price down ?




I would lend the shares for shorting if I am not intending to sell in the near future as I get paid to and it has no affect on the earnings of a company which is what really determines the long-term price of the shares.


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## Bushman

Nice short covering rally happening over at MQG and NAB at the moment. 

The system seems to be working today.


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## awg

Timmy said:


> Are you referring to short selling as being financial engineering and only available to few sophisticated users?  Short selling is actually very straightforward and requires only a little thought, it is also available to anyone with a reasonable grasp on the subject.  All relevant information can be found on public forums, like this one.
> 
> The recent turmoil is a failure of regulation, not a result of short selling.





No, as u can see from the 1st sentence of my post, i dont think short selling should be stopped at all.

my belief is that complex engineering of short selling on a massive and highly leveraged scale is where the problem potentially is worst, and the possibility of regulation needs to be examined.

this strategy is not available to anyone or everyone

the playing field is not level.

these strategies are only available to large players.

I believe such strategies favor the very wealthy, as only they can participate.

(only large players have institutional acces to really large parcels of shorting stock)

the potential for destabilisation, and wealth destruction of the majority is the question i raise.

i question in whose interest it is for exmple for say MQG to go down then up 30% in 2 days, and what role shorting and covering plays in that.

great for u if u made the right call 2 days running and were highly leveraged!

but for the majority...not good.

I am all for reasonable profit making potential, but if the risk of massive wealth destruction is increased by certain situations, my opinion is that should be considered.

Tech A post highlights some of these risks

i think most people would agree that the "financial masters of the universe" function at the cutting edge of capitalism, and "for want of a better word" are greedy.

i personally myself would prefer that limitations be imposed on methods that allow vast profits (or loss) potentialities to cause severe systemic risk.

shorting as a whole does not cause that risk.

massive undisclosed highly leveraged shorting, maybe that does.

of course i acknowledge my opinions may be incorrect..my old socialist tendencies must be creeping up on me!


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## deadset

I'm kind of getting the gist of how the share holders (as opposed to the actual owner) that allow shorting can use it as a type of insurance on their total value.

I've never done CFDs or shorting before myself.  I'm not ruling it out in the future.  I need to read up on the nitty gritty details of it a bit more.

Is Naked Shorting zero risk ?  I'm not sure how that can be allowed, as then there *would *be a vehicle to manipulate without risk.  I'm confused about this, because http://www.investopedia.com/terms/n/nakedshorting.asp says its illegal, yet I'm sure I saw company advertisments on yahoo finance US for Naked Shorting about a month ago.


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## Trembling Hand

Zero Risk???

You are exposed to unlimited losses when you go short


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## prawn_86

Three things:

1. Who/what did people blame before short selling was public knowledge?

2. What % of shorting here in Aus is actually done direct to market, not through MM CFDs? (is there anyway this can be found out? I would be really interested)

3. If you ban shorting, then do people support the banning of buying shares? *Buying pushes prices up, selling pushes it down. *In fact even for shorters to make cash they need other sellers there, otherwise its no different to buying and moving the price up...


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## tech/a

You missing the point here a bit guys.

Its the NON ASSET backed Derivatives which are the issue.
Simple short selling of stock is a non issue.


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## sam76

0310 GMT [Dow Jones] Australian government doesn't appear likely to ban short-selling, despite fresh concerns it heightened market volatility by triggering sharp falls in certain share prices, including Macquarie Group (MQG.AU), in recent days. Though PM Rudd welcomes moves by U.S., U.K., regulators to temporarily suspend short selling of stocks in attempt to stabilize markets, indications are his government won't go that far. Spokesman for Corporate Law Minister Sherry tells Dow Jones government will introduce Corporations Amendment (Short Selling) Bill into Parliament - as previously announced - in current spring session to ensure so-called "covered short selling" is adequately disclosed to market; but she indicates no further measures planned. Short selling in focus on concerns recent sharp share price falls exacerbated by hedge funds intent on driving down share prices. MQG shares rebounded as much as 52% today, reclaiming all previous day's loss and then some after actions by central banks globally and U.S. authorities soothed markets overnight; now +40% at A$36.42. (RAP)


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## brty

Tech,

This derivatives thing is something that is not understood by most. Let me explain.

A new derivative contract can be created out of thin air, for example if I drew up a contract to buy one trillion $AUS dollars worth of $US for 80 cents on the 15 july 2009, and you agreed to take up the other side of the contract, a new derivative of $1,000,000,000,000 has been born. I will assume neither of us has the $trillion to back it up 

At the conclusion of the contract if the $AUS is only worth 79  US cents, I have lost $10 billion, you have made $10 billion. But wait!, I don't actually have $10 billion, so i go bankrupt, you get both cents that I do own. 

In the above scenario, you as the counterparty did not lose anything, except the gains you thought you were going to make. The effect of the derivative being unwound is not that harmful to the economy as a whole.

The situation on Wall Street is not as simple as above, as what has happened in the past is that one side of the contract has on sold the contract to another party and made money on the exchange. (Eg say Lehmans bought the contract off you for 1 trillion and 1 billion dollars, they gave you the $1,000,000,000 profit, that you promptly declared as income, paid tax on, and spent the rest. 

If the contract closes at 79 cents, I have still only lost what I own, you still have whats left of your profit, and Lehmans lost $1 billion of borrowed/shareholders funds.

The $160 trillion of derivatives mentioned can mostly be unwound, yet there will obviously be some large losers along the way, but they will only lose the equivalent of past spent profits from all the parties playing the game, after all it is a zero sum game.

brty


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## awg

maybe i have combined different issues into my earliear posts

shorts on stocks

leverage

short positions in derivatives, magnified with leverage.

like I said straightforward shorting of stocks is integral to the system

obviously u also need a short taker in a derivative, in order for a long position to exist.

it still seems to me tho, that if their is high leverage and volume in any instrument, it is possible to predict, that at some time, a chain of events will take place that lead to a need for some party to unwind quickly, by firesale.

in a way, its not unlike a major builder that goes broke...the subbies dont get paid, tradies, suppliers, maybe even the bank, the houses dont get built and the builder might have to sell his house too...even the ATO!

anyone who put up unsecured loans or equity..no money


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## chops_a_must

We should ban people selling.


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## nunthewiser

Top post tech/a


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## PS421

ASIC to ban short-selling

Posted 36 minutes ago

The corporate regulator has clamped down on short-selling after what it describes as a week of unprecedented turmoil.

The Australian Securities and Investments Commission (ASIC) says so-called "naked" short-selling will be banned temporarily from Monday.

Short-selling is the practice of trading borrowed shares in such a way that the investor makes money when they lose value.

ASIC has made the move after the UK's corporate regulator, the Financial Services Authority, announced a tougher stance on short-selling overnight.

The US regulator is also reported to be moving against the practice.


http://www.abc.net.au/news/stories/2008/09/19/2369608.htm


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## Smurf1976

tech/a said:


> You missing the point here a bit guys.
> 
> Its the NON ASSET backed Derivatives which are the issue.
> Simple short selling of stock is a non issue.



Agreed there.

I first read about this whole situation, including the US mortgage implosion, in *2002*. Yep, it was totally foreseen, a situation possible because what's been going on relies absolutely upon nothing going wrong in a world where things usually do go wrong eventually. 

Like watching a driver speed through the suburbs at 200 km/h, the fireball was entirely predictable with only the timing and location of the disaster not known in advance. Something unexpected always happens eventually, and if you've got massive momentum / leverage and no escape route then you're totally stuffed when that moment unexpectedly arrives.


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## Naked shorts

I AM DEAD


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## agro

London midmorning: Surge continues

LONDON (ShareCast) - Footsie (news) is now nearly 400 points higher after financial stocks surged on the back of FSA plans to crack down on short-sellers.

Shares in Bradford & Bingley
(Advertisement)
(LSE: BB.L - news) , Lloyds, HBOS (LSE: HBOP.L - news) , Royal Bank of Scotland (LSE: RBS.L - news) and Barclays (LSE: BARC.L - news) are all up more than 30%.

From midnight last night, the UK financial regulator introduced new provisions to the Code of Market Conduct "to prohibit the active creation or increase of net short positions in publicly quoted financial companies".

US markets also picked up last night on talk that Treasury Secretary Hank Paulson is set to unveil a new rescue plan would create a vehicle to take on the US banks worst bad debts and get them lending again. Something similar was set up when the saving and loans banks industry collapsed in 1989.

Elsewhere, HSBC (LSE: HSBA.L - news) has walked away from its offer to buy a 51% stake in Korea Exchange Bank (004940.KS - news) , citing the current turmoil in the financial markets. "Discussions with Lone Star have not led to agreement on how the transaction might proceed on a basis acceptable to HSBC," the group said.

A private equity consortium led by Providence Equity Partners has scrapped its offer to buy conferences and publishing group Informa (LSE: INF.L - news) ,reportedly due to probelms raising the finance for the deal. The consortium's decision marks one of the first large deals to collapse since the onset of the credit crunch.

Pharmaceuticals giant GlaxoSmithKline (LSE: GSK.L - news) has confirmed that Variable Sales Forward (VSF) agreements with Lehman Brothers Finance SA have been terminated. The VSF agreements relate to 20m common shares of Quest Diagnostics.

Expectations that the current economic turmoil will boost bus use at the expense of trains prompted JP Morgan to raise its target prices on Arriva, National Express (LSE: NEX.L - news) and Stagecoach.

JP Morgan has lifted its target price on the aircraft services group BBA by 2p to 103p to reflect the stronger dollar, but remains 'underweight' on the stock given the economic risks it faces.

Altium Securities has raised its rating on engineering design software provider Aveva to 'buy' from 'hold' on valuation grounds.

The broker notes that shares in Aveva have fallen by more than a quarter since the beginning of the month in line with general turmoil and the falling oil price.

The Western Health and Social Care Trust has named an Interserve (LSE: IRV.L - news) consortium preferred bidder for the PFI contract to create and maintain a new acute hospital at Enniskillen.

Online gaming group PartyGaming (LSE: PRTY.L - news) has appointed Jon Salmon as its new chief marketing officer. Salmon will join PartyGaming from Ads Dot Com next month and will report directly to chief executive Jim Ryan.

Environmental consultant RPS is on the acquisition trail again, snapping up MSL, a European provider of specialist laboratory services. RPS is acquiring MSL from its management for a maximum cash consideration of £1.9m.

Aggregates group Ennstone (LSE: ENN.L - news) has received a preliminary approach which may or may not lead to an offer being made for the company.


----------



## MrBurns

Here you go.....

http://www.abc.net.au/news/stories/2008/09/19/2369608.htm


----------



## Smurf1976

Naked shorts said:


> I AM DEAD


----------



## Naked shorts

MrBurns said:


> http://www.abc.net.au/news/stories/2008/09/19/2369608.htm


----------



## cordelia

freddy2 said:


> I would lend the shares for shorting if I am not intending to sell in the near future as I get paid to and it has no affect on the earnings of a company which is what really determines the long-term price of the shares.




This is a fair comment......

Firstly, this is a link to article which clearly outlines the rules of short selling on the asx:
http://www.bwts.com.au/download/articles/long_short_and_short_selling.pdf

If you are a long term investor then the short term fluctuations in price really don't affect you....covered shorts were a good instrument in times past....the Internet has changed how people trade......and what we see....

The problem lies in the timeframe and naked shorts....I think the banning of naked shorts is a must.....

I am not going to outline the differences between covered and naked shorts ...there's plenty of info if you google it....but they are very different

I have read somewhere, I am not sure where and someone please correct me if I am wrong ,that brokers can only lend out shares, for the purpose of short selling, that have been purchased on a margin without gaining permission from the holder. This makes sense when you consider how brokers push margin lending


----------



## nomore4s

prawn_86 said:


> 1. Who/what did people blame before short selling was public knowledge




Didn't the media used to say "profit takers moving in" but I suppose thats only relevent for bull markets when there are profits to be taken:.


----------



## wayneL

MrBurns said:


> Here you go.....
> 
> http://www.abc.net.au/news/stories/2008/09/19/2369608.htm



There is an unsurprising ignorance of the difference between naked and covered short selling, given the appalling standard of financial journalism as displayed in this article.

"Naked" short selling has always (and should be) illegal.

The US and Aus regulators have banned naked short selling (hang on, it's always been illegal ). However the UK has banned ALL short selling on financial stocks.

The average muppet investor, I can forgive, even if they're muppets. The financial journo's are promulgating nonsense. Given the importance of understanding the issue, it is unforgivable.

The regulators, in manipulating sentiment in the face of said ignorance, should be arrested (serious!!!).

The UK regulators should be thrown into the tower of London to await beheading (only half joking).

This is changing the rules because they're losing... moving the goalposts.

Absolutely sickening.


----------



## chops_a_must

nomore4s said:


> Didn't the media used to say "profit takers moving in" but I suppose thats only relevent for bull markets when there are profits to be taken:.



I'm still spewing short sellers brought down my Dutch Tulip Bulb business.


----------



## Whiskers

cordelia said:


> This is a fair comment......
> 
> ....the Internet has changed how people trade......and what we see....
> 
> The problem lies in the timeframe and naked shorts....I think the banning of *naked* shorts is a must.....
> 
> I am not going to outline the differences between covered and naked shorts ...there's plenty of info if you google it....but they are very different




I totally agree as I have mentioned earlier.

I suppose a point to remember is that if certain rogue operators hadn't abused the regulations or traditional custom where regulations were sparse, so blatently, such as by creating and fueling rumors and fear etc to assist their shorts, we wouldn't have this situation.

The investment industry operators only have themselves to blame to a large extent for not sticking to a code of conduct that would keep control of the so called rogue shorting industry by self regulation and avoid this sort of heavy handed approach by the law makers,


----------



## wayneL

Whiskers said:


> I totally agree as I have mentioned earlier.
> 
> I suppose a point to remember is that if certain rogue operators hadn't abused the regulations or traditional custom where regulations were sparse, so blatently, such as by creating and fueling rumors and fear etc to assist their shorts, we wouldn't have this situation.
> 
> The investment industry operators only have themselves to blame to a large extent for not sticking to a code of conduct that would keep control of the so called rogue shorting industry by self regulation and avoid this sort of heavy handed approach by the law makers,




And rumours were never used on the upside were they?

Idiot thinking.


----------



## It's Snake Pliskin

wayneL said:


> There is an unsurprising ignorance of the difference between naked and covered short selling, given the appalling standard of financial journalism as displayed in this article.
> 
> "Naked" short selling has always (and should be) illegal.
> 
> The US and Aus regulators have banned naked short selling (hang on, it's always been illegal ). However the UK has banned ALL short selling on financial stocks.
> 
> The average muppet investor, I can forgive, even if they're muppets. The financial journo's are promulgating nonsense. Given the importance of understanding the issue, it is unforgivable.
> 
> The regulators, in manipulating sentiment in the face of said ignorance, should be arrested (serious!!!).
> 
> The UK regulators should be thrown into the tower of London to await beheading (only half joking).
> 
> This is changing the rules because they're losing... moving the goalposts.
> 
> Absolutely sickening.




The world is totally stuffed when a topic can be totally abused in the media. 

And now, as I listen to the online radio that the market rose because of the ban on short selling. What nobs


----------



## jeflin

When times are good, investment banks resisted all forms of intervention and regulation in the name of free market principles but now, when they gouged themselves with debts and are in trouble, they are begging the government to bail them out and ban short-selling on their stocks.

Double standards, don't you think.


----------



## Whiskers

wayneL said:


> And rumours were never used on the upside were they?




Of course they were. But one has to remember who has the power to make the rules.

From a political perspective if values keep going up people (and pollies) are generally happy. 

But when they go down they're not so happy... and if people get the perception that certain big operators are profiting even manipulating the market by fueling their shorts with rumour that naturally pisses people off. 



> Idiot thinking.




Nah, the real idiots were the chief market operators for not enforcing a code of conduct that would keep everyone happy, public and pollies included. 

The bottom line is when you're on a good thing and want to keep it... DON'T PUBLICLY FLAUNT THE SYSTEM.

By exasperating the market correction a few rogue operators have succeeded in causing a lot of the public and consequently pollies to loose confidence in the industry to self regulate the system, hence the crack down.

In short what do you expect if you ignore the umpire... you get sent off. If you then throw sand in the eyes of those who do have the power to change the rules you obviously risk them suspending or banning you from playing again.

Not very smart to abuse the umpire if you want to keep playing the game.


----------



## It's Snake Pliskin

jeflin said:


> When times are good, investment banks resisted all forms of intervention and regulation in the name of free market principles but now, when they gouged themselves with debts and are in trouble, they are begging the government to bail them out and ban short-selling on their stocks.
> 
> Double standards, don't you think.




Yes, it seems there have been double standards when the regulataionor lack of has failed. 

But also the double standards of the average person too. All is ok while making money, oh and let's add to the waterfall by offloading with no intention of buying back. Now that is scary!


----------



## wayneL

Whiskers said:


> Of course they were. But one has to remember who has the power to make the rules.
> 
> From a political perspective if values keep going up people (and pollies) are generally happy.
> 
> But when they go down they're not so happy... and if people get the perception that certain big operators are profiting even manipulating the market by fueling their shorts with rumour that naturally pisses people off.
> 
> 
> 
> Nah, the real idiots were the chief market operators for not enforcing a code of conduct that would keep everyone happy, public and pollies included.
> 
> The bottom line is when you're on a good thing and want to keep it... DON'T PUBLICLY FLAUNT THE SYSTEM.
> 
> By exasperating the market correction a few rogue operators have succeeded in causing a lot of the public and consequently pollies to loose confidence in the industry to self regulate the system, hence the crack down.
> 
> In short what do you expect if you ignore the umpire... you get sent off. If you then throw sand in the eyes of those who do have the power to change the rules you obviously risk them suspending or banning you from playing again.
> 
> Not very smart to abuse the umpire if you want to keep playing the game.



But you see this exposes the fluffy thinking as espoused by you. The umpire has a vested interest in the outcome.

He turned a blind eye to all the illegalities and questionable practices when it suited his interests (ie getting re-elected)

Financials have been ignoring the umpire the whole time, nay, been breaking the rules with the implicit approval of the umpire because it suited his purposes; it made the punters feel wealthy, (though it was largely illusory).

It was all OK on the upside, but not OK on the downside.

Now that the chickens are coming home to roost, the umpire wants to slam the chicken pen door shut before they get home - to avoid the awful truth; that the system is bankrupt, financially and morally, and has been for a long time.

One need look no further than the advent and proliferation of CDOs and allied instruments, and the complicity in fraud of the ratings agencies to understand that the system was rigged. The problem was that like any house of cards, it doesn't take much to blow it over once it gets to a critical size.

Now the regulators want to shield the collapsed pile of cards from few.

Worse... much worse.... is that they want to re-inflate the bubble, to rebuild the house of cards, to achieve a few more miserable years of power; at the expense of total financial collapse later, rather than taking the medicine now.

It is helped along by people like you who want to ignore the cold hard facts... that the system is unsustainable.

So congratulations Whiskers, you are in the imbecile majority who can't think past your own self-interest and the few short years "western capitalism" (aka demi socialism) has left.

We have (errrr *had*) a once in a cycle  opportunity (perhaps the last opporunity) to correct systemic ills of our economies and stave off the end of western economic hegemony and avoid handing it on a silver platter to the far east.

Because of the idiotic complicity of ignorant muppet investors, regulators and gu'mint, we have missed a golden opportunity.

Enjoy the illusion while it lasts, but be aware that your children and grandchildren will be paying for your total self-centredness and conceit and  of the selfish generation of which you belong.

Be proud Mr Manchurian Candidate.

</rant courtesy of Kronenburg 1664>


----------



## wayneL

Another view:



> _From John Stepek, across the river from the City​_John Stepek
> 
> You all know the story of the Emperor’s New Clothes. It’s an amusing tale of how a ruler’s greed and folly and the madness of crowds are punctured by the naÃ¯ve and pure honesty of a young boy. I suppose you could say that the moral of the story is - “the truth will out”.
> 
> But I always thought there was something about the fairytale that didn’t quite ring true. I finally realised what it was a few years ago when I read a similar folk tale from Singapore.
> 
> In it (or one version at least), a young lad takes the Raja and the local population to task over a clearly deluded scheme to boost the local economy. Instead of thanking him heartily and running the Raja out of town, the crowd chucks him off a cliff into the sea. The moral of that story is – “no one likes a smart-alec.”
> 
> And the world’s short-sellers are rapidly finding out to their cost, which of the two tales is the most accurate reflection of human nature…
> *
> Short-sellers aren’t to blame for the banking sector’s problems*
> 
> It’s time to “clean up” the City, says Gordon Brown. He’s going to rush forward better rules to protect whistleblowers, apparently and crack down on “irresponsible behaviour” in the financial markets. After all, he says, “we don’t want these problems occurring in the future.”
> 
> The FT reports how his noble words have roused the party’s left-wing. Labour MP John Cruddas said: “In the wake of casino capitalism and with the onset of recession, the state is the only means society has of protecting itself from the destructive forces of global capitalism.”
> 
> It would be hilarious if it didn’t make you want to weep. Bankers may well have acted as if they’ve been sitting in the casino during the boom years. But it was a state-owned casino, with governments as the croupiers, and central bankers behind the bar giving out free booze.
> 
> This Government built its reputation for economic “stability” on soaring house prices and nothing else. It was happy enough to point to this growth in “wealth” (not “debt”) as evidence of its competence all through the boom. And the reason that banks were able to lend as freely and as stupidly as they did, was because central bankers pushed interest rates so low. And who were central bankers working for? The Government, who set the inflation target too high, at a time when prices were being pushed lower – a healthy development - across the world by globalisation.
> 
> But of course, it can’t be the Government’s fault. So now we have a witch-hunt against the nearest available target – short-sellers. Yet, if you really want to protect whistleblowers, you should embrace short-sellers. Here’s why.
> 
> Short-selling’s a risky business. When it goes right, you can make a lot of profit. But when it goes wrong (as it clearly has today, given the rapid surge in the FTSE 100 and elsewhere), you can end up owing far more than your initial stake. So it’s not something to be done lightly. Unlike many ‘active’ fund managers, who just buy what everyone else is buying, a short-seller has to pick their targets carefully.
> 
> So when a short-seller takes an interest in a company, you can bet it’s got problems, or that it’s about to run into problems. It’s no coincidence that the most shorted stocks in the run-up to the UK recession have included retailers, newspapers, and of course, banks.
> 
> The point is that the shorts are just taking advantage of the underlying problem. The banks made wildly irresponsible loans all through the property boom, and now that the bubble has popped, they are in serious trouble. In a perfect world without politicians, there’d be no problem with short-sellers taking advantage of that – in fact, the banks are only getting their just desserts.
> *
> The real ‘spivs’ behind the financial crisis*
> 
> If Alex Salmond and the like want to attack ‘spivs’, how about the spivs who were cheerily selling young couples interest-only mortgages at six times their joint income? “Don’t worry about interest rates, love, you’ll be able to remortgage to a better deal in a couple of years’ time. And don’t worry about the capital – you can always start paying that back once you can afford it. Besides, the house’ll be worth a lot more by then.”
> 
> Those unlucky homeowners are now staring negative equity and rising mortgage payments square in the face, and the truth is it doesn’t matter a damn to them who owns their debt, because they can’t pay it anyway. Banning short-selling won’t help them.
> 
> But then, all that dodgy dealing was going on back in the good times. And when times are good, no one wants to hear the warnings, or to let anyone spoil the party. And unfortunately for short-sellers, when times turn bad, most people would rather throw the smart-alecs off a cliff, than admit that maybe they got it wrong.


----------



## chops_a_must

Whiskers said:


> Of course they were. But one has to remember who has the power to make the rules.
> 
> From a political perspective if values keep going up people (and pollies) are generally happy.
> 
> But when they go down they're not so happy... and if people get the perception that certain big operators are profiting even manipulating the market by fueling their shorts with rumour that naturally pisses people off.
> 
> 
> 
> Nah, the real idiots were the chief market operators for not enforcing a code of conduct that would keep everyone happy, public and pollies included.
> 
> The bottom line is when you're on a good thing and want to keep it... DON'T PUBLICLY FLAUNT THE SYSTEM.
> 
> By exasperating the market correction a few rogue operators have succeeded in causing a lot of the public and consequently pollies to loose confidence in the industry to self regulate the system, hence the crack down.
> 
> In short what do you expect if you ignore the umpire... you get sent off. If you then throw sand in the eyes of those who do have the power to change the rules you obviously risk them suspending or banning you from playing again.
> 
> Not very smart to abuse the umpire if you want to keep playing the game.



I've been away for many months, and you are still just as much of a spanker now as you were then.


----------



## Whiskers

chops_a_must said:


> I've been away for many months, and you are still just as much of a spanker now as you were then.








wayneL said:


> But you see this exposes the fluffy thinking as espoused by you. The umpire has a vested interest in the outcome.




Of course they have! I thought that is what I said.  Even more reason not to piss them off and throw sand in their face.

Lets get one thing crystal clear. I'm not against legal shorting. I've even recommended it on ther forum. Copy of post below.



> It is helped along by people like you who want to ignore the cold hard facts... that the system is unsustainable.




I've said a number of times that the system is unsustainable, including earlier in the XAO thread, but isn't the idea to trade what you are dealt. Well from an investment/trading perspective I think I've got it pretty right.



> So congratulations Whiskers, you are in the imbecile majority who can't think past your own self-interest and the few short years "western capitalism" (aka demi socialism) has left.
> 
> We have (errrr *had*) a once in a cycle  opportunity (perhaps the last opporunity) to correct systemic ills of our economies and stave off the end of western economic hegemony and avoid handing it on a silver platter to the far east.
> 
> Because of the idiotic complicity of ignorant muppet investors, regulators and gu'mint, we have missed a golden opportunity.




Hey man, that sounds more like a political speech from some idealistic politician than a trader.  



> Be proud Mr Manchurian Candidate.




No way... *the Manchurian's are the arogant loose canons in the industry that took on the umpire, dared him to act and lost.*



> </rant courtesy of Kronenburg 1664>




So what's this pissed off Fuming mood all about eh? Did ya get caught a bit short, maybe with yer pants down? 




Whiskers said:


> [From the XAO thread]
> 
> No, I didn't expect this sort of a bounce... because I really didn't think this 'pot hole' would get so deep.
> 
> But as it got deeper I could see no other option than the US regulators really jumping on 'suspicious' activity particularly 'naked' shorting, since they had threatened to previously if the market couldn't regulate itself.
> 
> I think it's just going to be a fact of life now that a few greedy and unscroupulous operators have tried to exploit the market going up then down again and got the lawmakers really pissed off enough to force their hand to more heavily regulate and monitor the system.
> 
> While some problems still exist in the US it just seemed inevetable that something like this would happen... I can't just recall the exact phrase I used some time ago (U F might recall )... bit it was basically that the worst of the US economic fallout would be deferred to another day.


----------



## wayneL

Whiskers said:


> No way... *the Manchurian's are the arogant loose canons in the industry that took on the umpire, dared him to act and lost.*



Sorry, you can't bounce the tag Manchurian. This shows complete lack of knowledge.

The "umpire" has ensured more Ma & Pa's get hurt in the market and people like you are too cognitively biased to know and too self centred to care.



Whiskers said:


> So what's this pissed off Fuming mood all about eh? Did ya get caught a bit short, maybe with yer pants down?



Likewise, a lack of knowledge. I am celebrating my best week in 7.5 years as mentioned on the beer thread. Volatility is good, no matter which direction.

I am fuming because I have a social conscience and detest moral hazard. In fact, the "umpire" here in the UK has broken the law over the LTSB/HBOS merger and a class action is being initiated right now. Stay tuned selfish man.


----------



## Whiskers

Hey Wayne... you're not still soaked on that kronenburg are you? 



wayneL said:


> Sorry, you can't bounce the tag Manchurian. This shows complete lack of knowledge.




Sorry, but you can't pin the tag Manchurian on me. I had nothing to do with changing the rules or even desired to. All I have been doing is trying to warn that a rogue element in the industry was dareing the gov to act and was always going to loose.



> The "umpire" has ensured more Ma & Pa's get hurt in the market and people like you are too cognitively biased to know and too self centred to care.




I don't know about that. Perhaps you could eloberate how more Ma and Pa's will get hurt. 



> I am fuming because I have a social conscience and detest moral hazard. In fact, the "umpire" here in the UK has broken the law over the LTSB/HBOS merger and a class action is being initiated right now.




With all respect, the moral hazad began ages ago as you have highlighted, when all the bad lending, gearing etc practices started and weren't nipped in the bud then by the industry who has the first duty of care. 

Are you advocating that two wrongs make it right, ie that it will be better to just sit back and watch the rogues scavenge through the calamity and chaos and take pot luck that Ma and Pa investers don't get hurt?

Did you have money invested in them?



> Stay tuned selfish man.




So how am I more selfish than you? After all you aparently rely heavily on shorting and profited from the wild swings both ways... thriving on the volatility. I've only been accumulating long positions lately. 

If you have such a moral conscience shouldn't you have abstained from the market and not tried to profit from the situation as soon as you realised the bad practices were happening? It sounds a bit hypocritical to even engage in, let alone profit from something you so strongly believe is a moral hazard.


----------



## wayneL

Whiskers,

The short selling rogues is a massive straw man. Sure there were institutional short sellers, but only after doing their due diligence and deciding that banks had nuked their own value. That's not rogue behaviour, that's just legitimate investing.

The influence of the illegal naked shorts is marginal at best.

You will have to wait and see about the Ma & Pa stuff, but mark my words.

So how am I more selfish than you? After all you aparently rely heavily on shorting and profited from the wild swings both ways... thriving on the volatility. I've only been accumulating long positions lately.



> If you have such a moral conscience shouldn't you have abstained from the market and not tried to profit from the situation as soon as you realised the bad practices were happening? It sounds a bit hypocritical to even engage in, let alone profit from something you so strongly believe is a moral hazard.





Oh please!

I have only ever played by the accepted rules of the game. I only take markets, I don't make them. I am at the mercy of the market, I live or die by the choices I make, I don't move the goal posts when I'm losing. I don't change the rules.

Ergo, there is no lack of morality on my part. Short selling (covered) is legal, moral and necessary for proper market function and actually supports share prices as I and others have detailed a thousand times.

Most short positions are maintained by option houses and MMs to be delta neutral the market and are totally benign. 

The rules will not stop institutions shorting the market anyway as they can still short via SSFs (single stock futures) and synthetic shorts via options. It's a piece of piss. Nothing will change except the perception that gu'mint is doing something and tinpot CFD traders won't be able to join the fun.

The immoral and stupid thing, is to blame short sellers for tanking share values. It's scapegoatism. Short sellers are not to blame for banks toxic activities which destroyed their own market value. They themselves are to blame.

But the truly toxic thing is banning ALL short selling. It is morally repugnant and anyone who supports it does not understand markets. Those that still support the ban after having it explained are just plain stupid and short sighted.

I can't go into LTSB/HBOS too much, but watch this space.


----------



## wayneL

Some back tracking already:

http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=aJ0LXWUmmLBg

D'oh!!!!!!!



> SEC Considers Revising Shorting Ban in Options Market (Update2)
> 
> By Edgar Ortega and Michael Tsang
> 
> Sept. 19 (Bloomberg) -- The U.S. Securities and Exchange Commission may revise its ban on short sales to add financial companies and carve out an exemption for brokerages that pair off brokers in the $1.6 trillion U.S. options market.
> 
> The commission may add companies after firms such as M&T Bank Corp. were left off a list of 799 insurers, banks and securities institutions barred from short sales. *The staff also will recommend that options market-makers be exempt from the ban,* easing concern the rule would raise investor costs, the agency said in a statement today.
> 
> *``If they don't fix it, there just won't be an options market on Monday,''* Steve Claussen, chief investment strategist at OptionsHouse LLC, the Chicago-based online brokerage unit of options trading firm PEAK6 Investments LP. ``If they have an exemption for market-makers that they're allowed to sell stock short, then they can provide a market in the options.''....
> 
> ...`Disastrous'
> 
> Options market makers would have been prohibited from making short sales starting next week under the ban adopted today to keep speculators from driving down stock prices. *The Options Clearing Corp., which guarantees all trades exchange- listed options, said a ban would have proved ``disastrous.''*
> 
> 
> *Under rule announced today, market-makers such as Interactive Brokers Group Inc. and Susquehanna International Group LLP would be unable to short a stock to hedge their risks when clients buy or sell options on financial shares.* Options give investors the right to buy or sell stocks at fixed prices in the future.
> 
> *Market-makers, accounting for about 40 percent of trades,* are obliged to quote prices at which they'll buy and sell securities so investors are able to complete trades...
> 
> ....``*Either you had to change the rules or you had to halt options trading,*'' said Henry Schwartz, president of Trade Alert LLC, a New York-based provider of options market analytics. ``This is the better choice. You couldn't have left it as it is *because options market makers were refusing to quote without the ability to hedge.'*'
> 
> Option Prices
> 
> Prices for options today show that market-makers were already seeking to compensate for the added risk by widening the difference between their bids and offers, according to Peter Bottini, an executive vice president of Chicago-based online brokerage OptionsXpress Holdings Inc. The wider spreads make it more costly for investors to buy or sell options.
> 
> ``*For our retail customers, the costs of adjusting their portfolio has gone through the roof, because the bid-ask spreads have gone through the roof,*'' said Bottoni, a former market maker at the Chicago Board Options Exchange.




MUPPETS .... IDIOTS


----------



## nomore4s

wayneL said:


> Worse... much worse.... is that they want to re-inflate the bubble, to rebuild the house of cards, to achieve a few more miserable years of power; at the expense of total financial collapse later, rather than taking the medicine now.
> 
> It is helped along by people like you who want to ignore the cold hard facts... that the system is unsustainable.




This is a very insightful point imo, one that is overlooked by nearly everyone.
History is littered with examples of what happens when bubbles burst, yet the governments and media are still in denial about it.

The longer these bandaid solutions are applied the worse the fallout will be in the end. What are the long term implications going to be? It appears everyone nowadays, from the bankers who dreamt up these schemes to the government who is now trying to stem the bleeding only have short term visions.

Damn Wayne your turning me into a full on bear:


----------



## cordelia

Well, for what it's worth....I have been watching four stocks that I had positions in very closely over the last few weeks...As soon as I saw what I describe below I closed them....When you see this sort of thing happening there's nothing you can do about it. You either get out and sit on the sidelines and take a small loss...or you sit and watch painfully....

These stocks have all had the same thing done to them....

Their prices have been deliberately driven down by platforming the ask with huge sell orders. 1 million to 3 million.....on stocks that have an average daily trading volume of 6 - 10 million.....

These orders are just far enough away from the action to never get filled. If they get close to that point they are quickly removed and placed on again at the back of the cue.

This effectively means panicked sellers, wanting to close out their positions, have to jump over them and place their orders ahead on the ask otherwise they never get closed out...As soon as they do this guess what....the big orders move down behind them.....

More and more sellers leap frog over these big orders in a slow, progressive downslide......until the selling slows down.....The big orders on the sell dissappear and the shares have changed hands at very cheap prices...

Then big orders platform the bid and the reverse happens......that's when I bought back my positions....

Now, this may not exactly be short selling......because those big orders were never traded but the process of naked shorts gives market manipulators the tools to push down prices for their own purposes.....They effectively use shares that don't exist to destroy legitimate people's lives.....

I have nothing against covered shorts......but the above is nothing short (pardon the pun) of criminal behaviour......


----------



## cordelia

The title of this thread should be changed to naked shorts.....it will be very interesting to see what happens on Monday.....


----------



## nomore4s

wayneL said:


> Some back tracking already:
> 
> http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=aJ0LXWUmmLBg
> 
> D'oh!!!!!!!
> 
> MUPPETS .... IDIOTS




What I want to know is what will they do once they realise banning short selling hasn't stopped prices going down and that there are now no short covering rallies to help support prices.

Remember prices can fall because there are no buyers (something that has been forgotten lately imo).


----------



## Mike Trader

I see shorting of financial Instruments has been banned in Uk till January.Has anyone read the book Fiasco,about what happened in the early 90'S?The subprime derivatives market problem is almost exactly the same-and no regulation was put in place after that.Some derivatives & swaps are so complex that few people in the world have the skill to write ,interpret or unravel them.Whatever is not illegal will be pushed to the max,its up to the regulators to restrict what they don't like,but they will always be playing catch up anyway,brilliant minds will be working out new ways to get around them.Its interesting that the U.S has rapidly become a socialist state by useing government money to support private enterprise,when Globalization theory tells us businesses should stand or fall on their own competativeness without tariffs or govt.support.
    I think naked shorting is one of the worst crimes committed by the big boys.IMHO


----------



## Trembling Hand

cordelia said:


> ......but the above is nothing short (pardon the pun) of criminal behaviour......





OMG this is truly getting ridiculous.


----------



## mit

nomore4s said:


> What I want to know is what will they do once they realise banning short selling hasn't stopped prices going down and that there are now no short covering rallies to help support prices.
> 
> Remember prices can fall because there are no buyers (something that has been forgotten lately imo).




Exactly, what people forget is that people are not going to short a company that is not a basket case. Stocks such as Lehman brothers, AIG etc were worth nothing


----------



## Timmy

cordelia said:


> As soon as I saw what I describe below I closed them....When you see this sort of thing happening there's nothing you can do about it. You either get out and sit on the sidelines and take a small loss...or you sit and watch painfully....
> 
> .....The big orders on the sell dissappear and the *shares have changed hands at very cheap prices...
> 
> Then big orders platform the bid and the reverse happens......that's when I bought back my positions....*




I don't get it ... sounds like f'n great trading to me, well done Cordelia!


----------



## Timmy

mit said:


> *Exactly, what people forget is that people are not going to short a company that is not a basket case. Stocks such as Lehman brothers, AIG etc were worth nothing*





Zactly!

So, you lot all complaining about short selling ....
When you buy shares, do you do a bit of research (TA or FA) to find one you think is going to go up?  Or do you buy shares that you think are going to fall?  Stupid question, I know, but I am trying to say this really slowly and carefully...

So, do you think those wanting to short sell shares might do a bit of research too?  Maybe even more than buyers do, 'cause when you short sell your risk is unlimited!  When you buy all you can lose is the money you bought the shares with, if the shares fall to zero.  When you short sell a share at whatever, say $20, what do you think happens to your position if the share goes to $50? $80 $100 ?  Like the kids say, do the math! (Are the kids still saying that?)

So, if you are going to be a short seller you need to do your research.  Do what Cordelia did above, coat-tail these guys, make some money!  That's what we do this stuff for, right?

p.s. Watch out for next bout of global turmoil and sharemarket slides - there will be no short-covering rallies to help you permabulls out next time! 

Maybe next time we can ban stop loss selling?


----------



## prawn_86

nomore4s said:


> What I want to know is what will they do once they realise banning short selling hasn't stopped prices going down and that there are now no short covering rallies to help support prices.
> 
> *Remember prices can fall because there are no buyers (something that has been forgotten lately imo).*




Fantastic post!

Or prices fall because there are a heap of sellers (not short sellers). Its not against the law to sell you know. Every time every one of you has sold, it creates downward pressure on prices (the amount of that pressure depends on the size of the amount being sold).

Some of the people in this thread seem to think it should be illegal for a stock price to go anywhere but up...


----------



## dhukka

wayneL said:


> Whiskers,
> 
> The short selling rogues is a massive straw man. Sure there were institutional short sellers, but only after doing their due diligence and deciding that banks had nuked their own value. That's not rogue behaviour, that's just legitimate investing.
> 
> The influence of the illegal naked shorts is marginal at best.
> 
> You will have to wait and see about the Ma & Pa stuff, but mark my words.
> 
> So how am I more selfish than you? After all you aparently rely heavily on shorting and profited from the wild swings both ways... thriving on the volatility. I've only been accumulating long positions lately.
> 
> 
> 
> 
> Oh please!
> 
> I have only ever played by the accepted rules of the game. I only take markets, I don't make them. I am at the mercy of the market, I live or die by the choices I make, I don't move the goal posts when I'm losing. I don't change the rules.
> 
> Ergo, there is no lack of morality on my part. Short selling (covered) is legal, moral and necessary for proper market function and actually supports share prices as I and others have detailed a thousand times.
> 
> Most short positions are maintained by option houses and MMs to be delta neutral the market and are totally benign.
> 
> The rules will not stop institutions shorting the market anyway as they can still short via SSFs (single stock futures) and synthetic shorts via options. It's a piece of piss. Nothing will change except the perception that gu'mint is doing something and tinpot CFD traders won't be able to join the fun.
> 
> The immoral and stupid thing, is to blame short sellers for tanking share values. It's scapegoatism. Short sellers are not to blame for banks toxic activities which destroyed their own market value. They themselves are to blame.
> 
> But the truly toxic thing is banning ALL short selling. It is morally repugnant and anyone who supports it does not understand markets. Those that still support the ban after having it explained are just plain stupid and short sighted.
> 
> I can't go into LTSB/HBOS too much, but watch this space.





Great post. It is a gigantic straw man argument but unfortunately the average shmo doesn't know any better and will probably believe it. Here is a link to an interview on CNBC in which Doug Kass of seabreeze partners debunks the theory that naked short selling is repsonsible for selling in financial shares. This is the key point for me:



> Fails to deliver from naked short selling account for only 1% of the daily volume according to the Depository Trust  and Clearing Corporation…. out of an average of 54 million new transactions processed every day, less than 20,000 are failed.


----------



## Mike Trader

I've changed my mind ,I think long and short positions should be banned:https://www.aussiestockforums.com/forums/images/smilies/tongue.gif


----------



## lesm

Trembling Hand said:


> OMG this is truly getting ridiculous.




Yes. Looks like the spin doctors, lobbyists and media and have done there job and the sheep and the gullible have fallen for it again. Diverting attention from the real situation or causes is what they are good at.

The root cause of current events really has very little to do with short selling per se.

The 'Houses of Cards' have experienced a series of events that have exposed their weaknesses, including the resultant consequences, for all to see.

Go back 12 to 18 months and relook at the series of events that were unfolding and people will see that this was not caused by short selling. 

Consider the level of denial that was being espoused by major financial institutions around the world, as to their level of exposure and the potential impact or lack thereof, and now look at the reality of the situation.

Now they want Governments to bail them out and the taxpayer will end up bearing the cost, but fundamental issues that caused this will end up being swept under the carpet once again.

Anyone who thinks that banning short selling, especially any form of short selling, regardless of the market (e.g., stocks, commodites, derivatives, etc.) has very little understanding of market mechanics or why they exist.

Legislation, as a knee jerk reaction, with regard to short selling that fails to consider commercial and market realities could potentially create more problems than it solves.

Cheers.


----------



## Aussiejeff

Mike Trader said:


> I've changed my mind ,I think long and short positions should be banned:https://www.aussiestockforums.com/forums/images/smilies/tongue.gif




Yeah. No more "Long" or "Short" positions. To reduce volatility, the only legal trades should be "Medium" positions.. and any shares so purchased *must be held for a minimum 12 months before resale* or $US1,000,000 fine applies!!

There. That sounds reasonable doesn't it?

LOL


aj


----------



## cordelia

Some poeple don't appear to know the difference between naked and covered shorts. They are completely different...clearly you haven't even read what the ASX has decided to do and are commenting based on second hand knowledge or more than likely complete ignorance

Here you go...straight from the horse's mouth....The ASX is banning naked short selling not all short selling.....

http://www.asx.com.au/about/pdf/mr_190908_abolition_naked_short_selling.pdf

and you can learn about it here

http://en.wikipedia.org/wiki/Naked_short_selling


----------



## awg

i have read most of the posts in this thread and contributed.

with my lame-assed lack of knowledge, i am puzzled about how this very sudden development will:

a) affect DMA CFD providers and users.

b)  (at a slight tangent), how the massive currents of Futures trading, may impact on market direction. (wont the short money go their?)

both here and OS.

seems like these effects, along with the high leverage, would move markets far more than short sellers of ordinary stock.

I am leaving aside ordinary sellers!

please forgive my ignorance ( i did vote against banning short selling)


----------



## cordelia

and which type of short selling would that be? That's the whole point......I can't vote because I don't agree with banning covered shorts but I do agree with what the ASX is doing...banning naked shorts......

everyone seems to have missed that point....


----------



## dhukka

cordelia said:


> and which type of short selling would that be? That's the whole point......I can't vote because I don't agree with banning covered shorts but I do agree with what the ASX is doing...banning naked shorts......
> 
> everyone seems to have missed that point....





I don't think everyone has missed that point. I haven't seen anyone object to banning naked short selling. However claims that naked shorts are responsiblefor large downward movements in stock prices are unfounded. As stated above, less than *1%* of daily transaction volumes of short sales in the US fail to deliver.


----------



## cordelia

dhukka said:


> I don't think everyone has missed that point. I haven't seen anyone object to banning naked short selling. However claims that naked shorts are responsiblefor large downward movements in stock prices are unfounded. As stated above, less than *1%* of daily transaction volumes of short sales in the US fail to deliver.




I'm sorry but that doesn't make sense.....You state " I haven't seen anyone object to banning naked short selling" ,.....but that is what the ASX is doing and plenty of people on this thread are complaining about banning short selling....If they are not objecting to banning naked short selling what are they objecting to?


Clearly they don't understand the difference....


----------



## dhukka

cordelia said:


> I'm sorry but that doesn't make sense.....You state " I haven't seen anyone object to banning naked short selling" ,.....but that is what the ASX is doing and plenty of people on this thread are complaining about banning short selling....If they are not objecting to banning naked short selling what are they objecting to?
> 
> 
> Clearly they don't understand the difference....




So you just proved my point. People are not objecting to naked short selling, they are objecting to a ban on short selling. But is everyone objecting to short selling on ASX listed companies or are they, as the opening posts suggests commenting on short selling worldwide? You are the one who has confined the context to the ASX. In case you hadn't noticed, the UK and US have banned any type of short selling on selected stocks. I think some people are objecting to the ban on short selling in those countries and yes some people do seem to be confused about the ban in Australia being only confined to naked shorts.


----------



## Timmy

I was, and am, aware that the ban only applies to naked shorters.  My posts, though, have been driven by what I am really objecting to, which is the scapegoating of short sellers (clothed or otherwise ) for the slide in global equity markets.  All this sudden government action is not addressing the real issues and is mere window dressing, chasing after a soft target, trumpeted for maximum publicity ("See, we are doing something!").  Much of this turmoil orginates in the US, where lax prudential regulation of financial institutions has allowed a ballooning of unsustainable debt, threatening not just global liquidity but, worse, much worse, global solvency.  That is what we should be really scared of, not a few hedge funds making some bucks from the fall (thank goodness someone is making some money from it and will be in a position to buy).  

What gets on my goat (goat, get it?...sorry) even more, though, is the effect the scapegoating has on each individual trader and investor.  By seeking out parties to blame we are misdirecting our attention from what really matters, from what we really need to understand, and trying to benefit from it, which is why we do all this stuff, isn't it? 

Cordelia, your post regarding how you got out of 4 positions and in at better prices is an example of what we all need to address.  (This, of course, is just IMHO, far be it from me to tell people what they should be doing ... but if I am trading with the goal to make money then understanding what *is*, and acting on what *is*, is going to help with my goal).

Further, Cordelia, in you excellent description of how you benefited from the falling prices I think it is fair to say that you thought that the manipulation you witnessed was wrong, unethical, whatever (I wont try to put words in your mouth about what you thought, but I think I am on the right general track).  The point I would like to make is that manipulation of prices in the market is attempted quite often, whether by putting in 'spoof' prices, hitting bids at a certain time to give the impression of an offered market when you really want to be buying large amounts, buying into the close to get the EOD traders interested ...etc.  (ps. All such activities are accompanied by risk, they are not guaranteed to move the price in your desired direction).  Indeed, the loud trumpeting of the bans on mnaked short selling from the authorities was a from of manipulation (to get prices rallying) itself.  If that was what they wanted to achieve, mission accomplished (at least for now).

Now, whether such manipulation is wrong or right ... the point is it is happening, and it is natural (ever haggled for anything?), my job is to try and recognise it and turn it to my advantage.  Even better if I can recognise when this manipulation is indicative of much large capital flows behind it, so seeing the driver of the next 'trend'.

Hope this all makes sense.


----------



## Timmy

awg said:


> i am puzzled about how this very sudden development will:
> 
> a) affect DMA CFD providers and users.




A question that has occured to me too.  I think, given the bulk of trading is on the long side then DMA CFD providers are always naturally long (given they transact each trade straight into the ASX market) and so those using DMA CFD providers to short sell to will be hedged by the provider merely selling out some of their long holdings.  This is just conjecture on my part, I don't know a a lot abouth the CFD industry.

ps. Thanks for your clarification of an earlier post awg (#45), I misunderstood your point somewhere there.


----------



## Trembling Hand

Timmy said:


> Now, whether such manipulation is wrong or right ... the point is it is happening, and it is natural (ever haggled for anything?), *my job is to try and recognise it and turn it to my advantage*.  Even better if I can recognise when this manipulation is indicative of much large capital flows behind it, so seeing the driver of the next 'trend'.




Yeah Timmy this is what ultimately puzzles me. Things are pushed and pulled. Some times buyers are stronger 02 to 07, some times sellers (not just shorts but all sellers) are stronger 08. People seem to be able to blame others before they will admit they have it wrong themselves. 

Then even more perplexing is that they don't direct their anger at the true cause of the situation. Funny games go on in our heads. No wonder its so hard to stay profitable.


----------



## cordelia

dhukka said:


> So you just proved my point. People are not objecting to naked short selling, they are objecting to a ban on short selling. But is everyone objecting to short selling on ASX listed companies or are they, as the opening posts suggests commenting on short selling worldwide? You are the one who has confined the context to the ASX. In case you hadn't noticed, the UK and US have banned any type of short selling on selected stocks. I think some people are objecting to the ban on short selling in those countries and yes some people do seem to be confused about the ban in Australia being only confined to naked shorts.




oh dear!......too hard


----------



## dhukka

cordelia said:


> oh dear!......too hard




Never mind, you might get it one day.


----------



## cutz

So does commsec refer to naked short selling as day short selling as opposed to term short selling with i assume is covered by stock lending in the latter case, please correct me if i'm wrong,

cutz.


----------



## Buster

Hey Cordelia,



cordelia said:


> oh dear!......too hard




Yep, give it up Cordelia.. Some here just have to be right all the time and seem to expertly manipulate the context of posts to continually 'prove their point'..  then loudly proclaim it to be so.. 

Hats off to whiskers too, for not delving into the 'tit for tat' name calling drivel that some here seem to view as necessary to deliver the point they are trying to make.. Sadly, it seems that some members here can only make themselves look good by attempting to belittle others that have a differing opinion.

On topic though, I'm with you.. No problems with shorting, but the nakeds need to be sorted..

Regards,

Buster


----------



## Whiskers

cordelia said:


> *Some poeple don't appear to know the difference between naked and covered shorts. *They are completely different...clearly you haven't even read what the ASX has decided to do and are commenting based on second hand knowledge or more than likely complete ignorance
> 
> Here you go...straight from the horse's mouth....The ASX is banning naked short selling not all short selling.....
> 
> http://www.asx.com.au/about/pdf/mr_190908_abolition_naked_short_selling.pdf
> 
> and you can learn about it here
> 
> http://en.wikipedia.org/wiki/Naked_short_selling






cordelia said:


> and which type of short selling would that be? That's the whole point......*I can't vote because I don't agree with banning covered shorts but I do agree with what the ASX is doing...banning naked shorts......*
> everyone seems to have missed that point....






cordelia said:


> Well, for what it's worth....I have been watching four stocks that I had positions in very closely over the last few weeks...
> 
> These stocks have all had the same thing done to them....
> 
> Their prices have been deliberately driven down by platforming the ask with huge sell orders. 1 million to 3 million.....on stocks that have an average daily trading volume of 6 - 10 million.....
> 
> These orders are just far enough away from the action to never get filled. If they get close to that point they are quickly removed and placed on again at the back of the cue.
> 
> This effectively means panicked sellers, wanting to close out their positions, have to jump over them and place their orders ahead on the ask otherwise they never get closed out...As soon as they do this guess what....the big orders move down behind them.....
> 
> More and more sellers leap frog over these big orders in a slow, progressive downslide......until the selling slows down.....The big orders on the sell dissappear and the shares have changed hands at very cheap prices...
> 
> Then big orders platform the bid and the reverse happens......that's when I bought back my positions....
> 
> Now, this may not exactly be short selling......because those big orders were never traded but *the process of naked shorts gives market manipulators the tools to push down prices for their own purposes*.....They effectively use shares that don't exist to destroy legitimate people's lives.....
> 
> *I have nothing against covered shorts*......*but the above is nothing short (pardon the pun) of criminal behaviour*......




I'm completely with you Cordelia.



Trembling Hand said:


> OMG this is truly getting ridiculous.




TH, this exact illegal activity has been warned against by ASIC and even people on this forum have said they have had orders cancelled and been warned for 'suspected' such behaviour.


----------



## Whiskers

dhukka said:


> I don't think everyone has missed that point. I haven't seen anyone object to banning naked short selling. However claims that naked shorts are responsiblefor large downward movements in stock prices are unfounded. As stated above, less than *1%* of daily transaction volumes of short sales in the US fail to deliver.




Dhukka, by dumbing down the numbers and the readers of this forum you are only highlighting your own self righteousness and disrespect for others.

Obviously if those numbers were strategically placed they are quite large enough to have an impact.

Just in case your bias is so encompassing of your cognitive processes... have a think about a parallel scenario. 

Two armies of 1,000 men with 1,000 bullets face off. Lets call one army the buyers, the other sellers.

One army (buyers) decides to set up an ambush, positions snipers (naked shorts) to weaken the targets defences, cause a decoy (romours and media speculation) then send in a small strike force (shorts that don't settle untill a couple of days later than should) to further weaken the defences before launching a full frontal assult (legal shorts). Clearly the ambusher is going to have ammunition left after the ambushed has run out.

Now that's not too hard to understand is it?



Buster said:


> Hey Cordelia,
> 
> Yep, give it up Cordelia.. Some here just have to be right all the time and seem to expertly manipulate the context of posts to continually 'prove their point'..  then loudly proclaim it to be so..
> 
> Hats off to whiskers too, for not delving into the 'tit for tat' name calling drivel that some here seem to view as necessary to deliver the point they are trying to make.. *Sadly, it seems that some members here can only make themselves look good by attempting to belittle others that have a differing opinion.*
> On topic though, I'm with you.. No problems with shorting, but the nakeds need to be sorted..
> 
> Regards,
> 
> Buster




Thanks buster, I do my best, but there are many rational and fair minded people like you and cordelia on the forum. 

Sometimes one needs to just walk away when the conversation is becoming too disrespectful and insulting to reasonable human intelligence... and I believe that time has come for me now.


----------



## dhukka

Whiskers said:


> Sometimes one needs to just walk away when the conversation is becoming too disrespectful and insulting to reasonable human intelligence... and I believe that time has come for me now.




Best decision you ever made.


----------



## cordelia

cutz said:


> So does commsec refer to naked short selling as day short selling as opposed to term short selling with i assume is covered by stock lending in the latter case, please correct me if i'm wrong,
> 
> cutz.




I am not familiar with Comsec's policy as regards to short selling but the term of the trade is not the difference between a naked short and a covered short...

Simply put, a covered short is one where a seller borrows the stock from a broker, prior to the sell, in anticipation that the price will fall. He then purchases the stock and returns it to the broker.... The broker has actually borrowed the stock from an investor who is "long".....The broker, ie Comsec, is the middle man.....of course the real securities never physically change hands but they do exist......So if you are long 10000 shares on CBA you have purchased through Comsec, the broker can lend these out for covered short purposes....

I am not sure of the rules here but in the states the broker has to request the permission of the holder before they can lend out the stock....If on the other hand the customer has borrowed money to purchase the shares the broker does not require permission....

There's nothing wrong with this process. In fact covered short selling actually enables other investors or traders to go long......

Naked shorts, on the other hand are very different.  These are sells without first arranging the borrow. This means that ficticious shares can be sold in a deliberate attempt to drive down the price....

This is an abusive practice because the trader or syndicate involved   has no intention of ever delivering the shares.....that's the crucial difference....the failure to deliver ultimately creates the phantom shares.... By placing a  sell order, large enough to move the share price ,it is likely to succeed. Once they cover the short they then short it back into the market, further driving down the price....The price keeps dropping but none of the shares sold actually ever existed....

The penalities for fails to deliver are far outwighed by the profits to be had and despite claims by some that "failure to delivers" are minimal the problem is important enough for the US Securities Exchange to create the "Threshold Security List" under Regulation SHO. This list reports any stock where more than .05% of a company's total outstanding shares failed delivery for five consecutive days....


----------



## chops_a_must

Whiskers said:


> Sometimes one needs to just walk away when the conversation is becoming too disrespectful and insulting to reasonable human intelligence...



I find most of your posts insulting to human intelligence.


----------



## Julia

chops_a_must said:


> I find most of your posts insulting to human intelligence.



Just wondering why you felt it necessary to make such an unpleasant post?
It doesn't contribute to the discussion, and simply seems like nastiness for its own sake.   
I'm not sure you'd be very pleased if everyone on this forum who happened to disagree with various comments you may have made were motivated to express that disagreement in the form of a wholly unnecessary personal attack.


----------



## chops_a_must

Julia said:


> Just wondering why you felt it necessary to make such an unpleasant post?
> It doesn't contribute to the discussion, and simply seems like nastiness for its own sake.
> I'm not sure you'd be very pleased if everyone on this forum who happened to disagree with various comments you may have made were motivated to express that disagreement in the form of a wholly unnecessary personal attack.



Time and time again Whiskers is shown to be abjectly incorrect on any basis you want to look at it.

Just like in this thread. Despite having the facts spelled out quite clearly, it seems quite beyond the dogmatism of Whiskers to take them on board, or to even be cognisant of them.

It's not a matter of making poor calls, it's a matter of having to read the regurgitated bollocks from the likes of typical media outlets and the muppets running the economy.


----------



## subi1

nomore4s said:


> lol, yep the media and general public have fallen for it hook line and sinker.
> 
> This correction is purely because of unregulated short selling, nothing to do with fundamentals or big companies losing billions and going broke - I mean why would that drive share prices down.




Yeah I guess thats why BHP has been going down.

Even though it has record profits ,heaps of cash, increasing production and a diversity of product lines. I am pretty sure it was going up 8% one day,down 8% the next bexcause it was losing big.

It appears to me as though there might have been an effect on its price from shorters. The shorters don't only pick on companies with bad fundamentals. It is all just a game to try and shake ordinary investors out and take some percentage along the way. 

I just can't see that the way shorting is being abused is good for anyone in the markets.

DYOR


----------



## chops_a_must

subi1 said:


> Yeah I guess thats why BHP has been going down.
> 
> Even though it has record profits ,heaps of cash, increasing production and a diversity of product lines. I am pretty sure it was going up 8% one day,down 8% the next bexcause it was losing big.
> 
> It appears to me as though there might have been an effect on its price from shorters. The shorters don't only pick on companies with bad fundamentals. It is all just a game to try and shake ordinary investors out and take some percentage along the way.
> 
> I just can't see that the way shorting is being abused is good for anyone in the markets.
> 
> DYOR




Um.... what?

In case you haven't noticed, a lot of commodities have had a star picket banged up their arses.

I can't see the way hedge funds were long in commodities was good for our markets.

But you go on thinking shorters determine whether a company makes or loses money...


----------



## cutz

Sorry cordelia,

I think my question was incorrectly worded, i understand the mechanics but i was pondering on the following items.

Comsec have a product called Term Short Selling, you have 11 months to close out after setting up a trade, i am assuming this form of short selling is covered,

Their other product is Day Short Selling, you have to close out position within the day so i am assuming this is naked and it will be banned as of Monday, no news on their website yet on what will be happening.

I was just wondering if the first product, Term Short Selling will still be available on Monday as it appears to be covered shorting.

cutz.


----------



## cordelia

cutz said:


> Sorry cordelia,
> 
> I think my question was incorrectly worded, i understand the mechanics but i was pondering on the following items.
> 
> Comsec have a product called Term Short Selling, you have 11 months to close out after setting up a trade, i am assuming this form of short selling is covered,
> 
> Their other product is Day Short Selling, you have to close out position within the day so i am assuming this is naked and it will be banned as of Monday, no news on their website yet on what will be happening.
> 
> I was just wondering if the first product, Term Short Selling will still be available on Monday as it appears to be covered shorting.
> 
> 
> 
> cutz.




I'm sorry I can't answer your question..I don't trade through Comsec.. and I don't trade short because I have never felt comfortable doing so...that doesn't mean I am against it...I like to fully understand something before I put my money into it...


Who knows what will happen Monday as this action by the ASX is unprecedented....but rest assured, the open, is going to be the best show in town....


----------



## Trembling Hand

Whiskers said:


> TH, this exact illegal activity has been warned against by ASIC and even people on this forum have said they have had orders cancelled and been warned for 'suspected' such behaviour.





Xcatly my point Whiskers. Its been happen for 200 years. Spoof orders have been just as much part of the game during the bull market from 03 to 07 as they are now. So whats your point? Because your longs have been getting the cucumba rumba that's not fair.

Its just plain dumb to blame shorts on stuffing the order book. Anyone who knows how to trade loves that kind of stuff. Doesn't give a toss who it is, they know they will always be there and trade the game. They look after their own actions and don't shift responsibility for there own failures onto the villain De jour.

The comment above about BHP just shows the hysteria about shorting. I mean western economies are on the edge of meltdown and some punter reckons a stock price shouldn't fall because *last year* it posted a profit.


----------



## psychic

Going by the poll results, one would suggest that 65% of investors or more are short in this current market.  No wonder we have been slipping into the black hole.  Bad rumours get spread, companies collapse, people lose their jobs, and people suicide, how can shorting be good for the common person.

Glad shorting is being banned:


----------



## cutz

i hate to break this to you but it's not being banned :


----------



## wayneL

psychic said:


> Going by the poll results, one would suggest that 65% of investors or more are short in this current market.  No wonder we have been slipping into the black hole.  Bad rumours get spread, companies collapse, people lose their jobs, and people suicide, how can shorting be good for the common person.
> 
> Glad shorting is being banned:




After some of the comments on this thread and others, I'm going short on humanity.


----------



## dhukka

psychic said:


> Going by the poll results, one would suggest that 65% of investors or more are short in this current market.  No wonder we have been slipping into the black hole.  Bad rumours get spread, companies collapse, people lose their jobs, and people suicide, how can shorting be good for the common person.
> 
> Glad shorting is being banned:




The problem with this kind of thinking is apart from being absolutely clueless, is that it is gaining credence among the misinformed.


----------



## Timmy

psychic said:


> Going by the poll results, one would suggest that 65% of investors or more are short in this current market.  No wonder we have been slipping into the black hole.  Bad rumours get spread, companies collapse, people lose their jobs, and people suicide, how can shorting be good for the common person.
> 
> Glad shorting is being banned:




LOL psychic.

I think you are confusing what the question on the poll is with ASF posters' positions.  And then confusing the representativeness of ASF posters within the whole market.  I would suggest a number around 65% being short is out by a factor of more than 10.


----------



## Timmy

wayneL said:


> After some of the comments on this thread and others, I'm going short on humanity.




I think the bid is pretty low ...


----------



## nioka

psychic said:


> Going by the poll results, one would suggest that 65% of investors or more are short in this current market.  No wonder we have been slipping into the black hole.  Bad rumours get spread, companies collapse, people lose their jobs, and people suicide, how can shorting be good for the common person.
> 
> Glad shorting is being banned:




 What I read out of this thread is that there are a few ASFers who will defend their right to trade this way even if the trading is nonproductive in a real sense. They are quite happy to profit by any means and have no sympathy for any other investor that has made a genuine investment and ended up losing their super.

 There are others prepared to accept short trading providing it is open, recorded and that the trader short selling must have ownership, or control of the ownership, of the stock being traded. That is my personal opinion.

 There is no doubt that the way short selling has been used recently has been a blight on the investment scene.


----------



## mazzatelli1000

nioka said:


> What I read out of this thread is that there are a few ASFers who will defend their right to trade this way even if the trading is nonproductive in a real sense. They are quite happy to profit by any means and have no sympathy for any other investor that has made a genuine investment and ended up losing their super.




Welcome to the real world....its tough isn't it!!


----------



## subi1

nioka said:


> What I read out of this thread is that there are a few ASFers who will defend their right to trade this way even if the trading is nonproductive in a real sense. They are quite happy to profit by any means and have no sympathy for any other investor that has made a genuine investment and ended up losing their super.
> 
> There are others prepared to accept short trading providing it is open, recorded and that the trader short selling must have ownership, or control of the ownership, of the stock being traded. That is my personal opinion.
> 
> There is no doubt that the way short selling has been used recently has been a blight on the investment scene.




Good post Nioka.

I think it is disgraceful that stocks can be shorted (sold) even if the seller doesn't hold legal title to the stock. 

This should be stopped immediately. Also I believe the fines for this type of shorting should be increased massively and enforced rigidly.


----------



## IFocus

nioka said:


> What I read out of this thread is that there are a few ASFers who will defend their right to trade this way even if the trading is nonproductive in a real sense. They are quite happy to profit by any means and have no sympathy for any other investor that has made a genuine investment and ended up losing their super.
> 
> There are others prepared to accept short trading providing it is open, recorded and that the trader short selling must have ownership, or control of the ownership, of the stock being traded. That is my personal opinion.
> 
> There is no doubt that the way short selling has been used recently has been a blight on the investment scene.




Nioka the investment scene currently as already pointed out is getting crushed and the market is falling because we are looking at possibly the biggest collapse or at least one of the biggest contractions of leveraged credit globally.

Tell me the last time the US government pumped a trillion into its financial system to save them from collapse?

Ignoring this point and blaming short sellers with all due respect is delusional IMHO

Market participants sell short to profit from *a falling market* or more importantly the savvy investors hedge their positions in *a falling market* not the other way round.


----------



## jeflin

I am against naked shorts but not shorting. They are a necessary counterweight to ridiculous valuations.

If the market depends on the longs to sell their shares, the bubble may extend infinitely before popping with dire consequences. There is little incentive for a person is holding onto an existing stock to cash out when the share prices continue to climb. 

To allow prices to come back to a reasonable level, another group of investors (shortsellers) have to enter the market and their sole interest is to profit from a decline in prices and return back the shares thereafter. 

By banning the short-sellers, one half of the equation of trading is disrupted. In extraordinary circumstances of panic, yes, but if it is indefinitely, then no.


----------



## It's Snake Pliskin

nioka said:


> What I read out of this thread is that there are a few ASFers who will defend their right to trade this way even if the trading is nonproductive in a real sense. They are quite happy to profit by any means and have no sympathy for any other investor that has made a genuine investment and ended up losing their super.
> 
> There are others prepared to accept short trading providing it is open, recorded and that the trader short selling must have ownership, or control of the ownership, of the stock being traded. That is my personal opinion.
> 
> There is no doubt that the way short selling has been used recently has been a blight on the investment scene.




Nioka,

It is dangerous to walk around with manufactured opinions borrowed from the media and then believe them enough to get emotional over. 

Really, this is knuckle dragging stuff the world is being subjected to by the likes of the media and people shifting the blame from the real causes.


----------



## It's Snake Pliskin

subi1 said:


> Good post Nioka.
> 
> I think it is disgraceful that stocks can be shorted (sold) even if the seller doesn't hold legal title to the stock.
> 
> This should be stopped immediately. Also I believe the fines for this type of shorting should be increased massively and enforced rigidly.




Planet of the apes is a good movie for exposing the power of myths and lies.


----------



## It's Snake Pliskin

lesm said:


> Yes. Looks like the spin doctors, lobbyists and media and have done there job and the sheep and the gullible have fallen for it again. Diverting attention from the real situation or causes is what they are good at.
> 
> The root cause of current events really has very little to do with short selling per se.
> 
> The 'Houses of Cards' have experienced a series of events that have exposed their weaknesses, including the resultant consequences, for all to see.
> 
> Go back 12 to 18 months and relook at the series of events that were unfolding and people will see that this was not caused by short selling.
> 
> Consider the level of denial that was being espoused by major financial institutions around the world, as to their level of exposure and the potential impact or lack thereof, and now look at the reality of the situation.
> 
> Now they want Governments to bail them out and the taxpayer will end up bearing the cost, but fundamental issues that caused this will end up being swept under the carpet once again.
> 
> Anyone who thinks that banning short selling, especially any form of short selling, regardless of the market (e.g., stocks, commodites, derivatives, etc.) has very little understanding of market mechanics or why they exist.
> 
> Legislation, as a knee jerk reaction, with regard to short selling that fails to consider commercial and market realities could potentially create more problems than it solves.
> 
> Cheers.




I just bumped this post because it is good.


----------



## It's Snake Pliskin

cordelia said:


> I'm sorry but that doesn't make sense.....You state " I haven't seen anyone object to banning naked short selling" ,.....but that is what the ASX is doing and plenty of people on this thread are complaining about banning short selling....If they are not objecting to banning naked short selling what are they objecting to?
> 
> 
> Clearly they don't understand the difference....




Cordelia,

You have made this point in many of your posts. 

Most like me are sick of the lies and rumour like attitudes of people who don't really understand what short selling as a whole provides the market with. 

Naked shorts are not healthy for shorting as a topic in general I do admit. 

Try some shorting it will show you why it is healthy for the market.

Cheers..


----------



## It's Snake Pliskin

psychic said:


> Going by the poll results, one would suggest that 65% of investors or more are short in this current market.  No wonder we have been slipping into the black hole.  Bad rumours get spread, companies collapse, people lose their jobs, and people suicide, how can shorting be good for the common person.
> 
> Glad shorting is being banned:




Investigate the lies psychic.

Lies do more damage to workers than shorters do. 

Shorting is healthy for the market. It provides a bottom and is a catalyst for recoveries in price. So after all the mums and pops sell and shorters have made some they cover their short positions and up comes the price followed by some long traders. 

Without shorting, the mums and pops will keep pushing down the price to zero.


----------



## nioka

It's Snake Pliskin said:


> Nioka,
> 
> It is dangerous to walk around with manufactured opinions borrowed from the media and then believe them enough to get emotional over.
> 
> Really, this is knuckle dragging stuff the world is being subjected to by the likes of the media and people shifting the blame from the real causes.




 I'm long enough in the tooth and have been around enough not to get too emotional over anything the press can come up with. Likewise I have had enough experience in business to see through the attitudes of a lot of posters on ASF that have no real wide experience in the business world. 

 One thing I learnt early in business life is not to disregard the 3 Ms. For business the three must have a balance and a good relationship. 

The three Ms, MONEY, MANPOWER and MACHINERY. They are all necessary for prosperous production. When one dominates over the others the end result will be failure. 

This forum concentrates on the money angle at times as though it is the exclusive factor in business. To be traded recklessly with no thought to productivity or for any consideration to others.

 Just as we need traffic regulations for safety on the road, we need regulations governing trading. There is no doubt that the use of trading shorts has been abused. Safety on the road could be guaranteed 100% if we were banned from using the roads. Instead of a ban we accept rules that reduce the risk. By the same token, we need rules to control short selling. Until we have rules the practice should be suspended. 

Some of you may just have to resort to other means of trading while the rules are established. Can I suggest real fundamental investing and be a part of the real investment money part of the business community.


----------



## It's Snake Pliskin

> Likewise I have had enough experience in business to see through the attitudes of a lot of posters on ASF that have no real wide experience in the business world.



Ok. But then you say this below...(in red)



> This forum concentrates on the money angle at times as though it is the exclusive factor in business. To be traded recklessly with no thought to productivity or for any consideration to others.



Now, I thought it was quite clear that anyone with any sense of investment survival be that through trading short, medium or long term, that this forum does provide anti reckless attitudes and information. Enough to say that investing as according your paradigm is RECKLESS. HIH. Ring any bells? And the shorters wern't blamed then. Who provide the public with any consideration then? And is that different to today?



> Just as we need traffic regulations for safety on the road, we need regulations governing trading. There is no doubt that the use of trading shorts has been abused. Safety on the road could be guaranteed 100% if we were banned from using the roads. Instead of a ban we accept rules that reduce the risk. By the same token, we need rules to control short selling. Until we have rules the practice should be suspended.




I agree with the transparent nature of all trading be that long or short. 



> Some of you may just have to resort to other means of trading while the rules are established. Can I suggest real fundamental investing and be a part of the real investment money part of the business community.




Now that is naieve from an experienced business guy as self titled above. So you espouse getting into fundamental investing.  

Sorry Nioka you have a lot to learn in the business of investing. Your assumption that the people who support shorting only trade short shows a lack of investment and market savvy not to mention ignorance.


----------



## nomore4s

nioka said:


> B]They are quite happy to profit by any means and have no sympathy for any other investor that has made a genuine investment and ended up losing their super.




lol, so the greedy companies that have caused this debacle and have the US economy on the verge of collapse because of the short sighted nature of thier investment decisions and dodgy financial engineering are okay but the traders that are smart enough to make the most of the opportunity deserve to be hung?



nioka said:


> Some of you may just have to resort to other means of trading while the rules are established. Can I suggest real fundamental investing and be a part of the real investment money part of the business community.




So because you don't agree with how other people invest or trade we should all now invest the way you see fit.


----------



## nioka

It's Snake Pliskin said:


> Sorry Nioka you have a lot to learn in the business of investing. Your assumption that the people who support shorting only trade short shows a lack of investment and market savvy not to mention ignorance.




Agree that I have a lot to learn about investing. Don't we all.

 I never assumed that people that support shorting only trade shorts. 

What I do know is that the real reason for a stock exchange existing is for it to be a vehicle for the provision and maintence of the financial needs of a productive society. I also know that there are those who would like to siphon off as much of that finance as they can for their personal use rather than leave it in the productive system.  

 I see a vast difference between a smart investor and a smart trader. In my case my smart investments are much more important to me than my smart trades.  However, saying that, I only trade stocks I am prepared to invest in.


----------



## nioka

nomore4s said:


> lol, so the greedy companies that have caused this debacle and have the US economy on the verge of collapse because of the short sighted nature of thier investment decisions and dodgy financial engineering are okay but the traders that are smart enough to make the most of the opportunity deserve to be hung?
> 
> 
> 
> So because you don't agree with how other people invest or trade we should all now invest the way you see fit.




Now that is twisting what I say.

 I have no sympathy for GREEDY companies or their directors. 

 Just the same as I have to obey the speed limit ( that is another story as I had my car photagraphed by a camera in Brisbane last week) I believe there should be better rules for short trading. Until the rules are established that trading must be suspended. 

 I see the recent use of trading in shorts similar to looting. eg. while the law isn't watching grab what you can. (Or like the football finals being played without a ref.)


----------



## Trembling Hand

nioka said:


> Agree that I have a lot to learn about investing. Don't we all.
> 
> I never assumed that people that support shorting only trade shorts.
> 
> What I do know is that the real reason for a stock exchange existing is for it to be a vehicle for the provision and maintence of the financial needs of a productive society. I also know that there are those who would like to siphon off as much of that finance as they can for their personal use rather than leave it in the productive system.
> 
> I see a vast difference between a smart investor and a smart trader. In my case my smart investments are much more important to me than my smart trades.  However, saying that, I only trade stocks I am prepared to invest in.





Nioka You are truly full of it!! You are a speculator in exactly the same way as I am.

What percentage of you investment capital goes directly to the company?? For their operation needs? VERY LITTLE!! I know you are going to post some example when you took up a rights or share placement But come on!! 99% of transactions on all markets are for the purpose of speculation. Whether its a period of seconds or years.

On another issue you are not the only one to come from a business back ground and I find your righteousness about the evils of shorts staggeringly ignorant. What happens in capitalism when one side gets a monopoly on price setting? BUBBLES.


----------



## nioka

Trembling Hand said:


> Nioka You are truly full of it!! You are a speculator in exactly the same way as I am.
> 
> What percentage of you investment capital goes directly to the company?? For their operation needs? VERY LITTLE!! I know you are going to post some example when you took up a rights or share placement But come on!! 99% of transactions on all markets are for the purpose of speculation. Whether its a period of seconds or years.
> 
> On another issue you are not the only one to come from a business back ground and I find your righteousness about the evils of shorts staggeringly ignorant. What happens in capitalism when one side gets a monopoly on price setting? BUBBLES.



 I think you should study business msnagement. That may give you an understanding of company capitalisation.  Of course I am a speculator, an investment speculator. I also trade.


----------



## cordelia

It's Snake Pliskin said:


> Cordelia,
> 
> You have made this point in many of your posts.
> 
> Most like me are sick of the lies and rumour like attitudes of people who don't really understand what short selling as a whole provides the market with.
> 
> Naked shorts are not healthy for shorting as a topic in general I do admit.
> 
> Try some shorting it will show you why it is healthy for the market.
> 
> Cheers..




I understand perfectly well why covered shorts are healthy for the market ..whateve r gave you the idea I didn't go back and read my posts properly and   stop making a fool of yourself.....

Please show me where I have stated that covered short selling is not good for the market....


----------



## cordelia

jeflin said:


> I am against naked shorts but not shorting. They are a necessary counterweight to ridiculous valuations.
> 
> If the market depends on the longs to sell their shares, the bubble may extend infinitely before popping with dire consequences. There is little incentive for a person is holding onto an existing stock to cash out when the share prices continue to climb.
> 
> To allow prices to come back to a reasonable level, another group of investors (shortsellers) have to enter the market and their sole interest is to profit from a decline in prices and return back the shares thereafter.
> 
> By banning the short-sellers, one half of the equation of trading is disrupted. In extraordinary circumstances of panic, yes, but if it is indefinitely, then no.




good post...well said...unemotional, factual but more importantly not aimed at insulting anyone...


----------



## Trembling Hand

nioka said:


> I think you should study business msnagement. That may give you an understanding of company capitalisation.



I don't have to. I left school at the age of 17 and 3 years later had my own business. 80% of the time since then I have ran/owned my own business. I doubt many here could match that.



nioka said:


> That may give you an understanding of company capitalisation.




Yes exactly why shorts are so important. Stops wasted capital and time on companies that use BS to run up their share prices and use that to attract even more capital that is used to prop up share prices to attract even more capital to prop up their share prices.......... 

Would you like an example. try ABC learning. Try Worldcom. Try Enron. Try Sunbeam.


----------



## psychic

It's Snake Pliskin said:


> Investigate the lies psychic.
> 
> Lies do more damage to workers than shorters do.
> 
> Shorting is healthy for the market. It provides a bottom and is a catalyst for recoveries in price. So after all the mums and pops sell and shorters have made some they cover their short positions and up comes the price followed by some long traders.
> 
> Without shorting, the mums and pops will keep pushing down the price to zero.




LOL, shorters drive the price down to zero and the mum and pops, end up with very little in their super accounts and end up relying more heavily on welfare (pensions).  The companies then go bust and the workers end up on welfare(unemployment).  Long-term depression, higher suicide rates etc etc.

Tell me again how shorters benefit the community



Tax payers support shorters behaviour, thats why its now banned.


----------



## skyQuake

psychic said:


> LOL, shorters drive the price down to zero and the mum and pops, end up with very little in their super accounts and end up relying more heavily on welfare (pensions).  The companies then go bust and the workers end up on welfare(unemployment).  Long-term depression, higher suicide rates etc etc.
> 
> Tell me again how shorters benefit the community
> 
> 
> 
> Tax payers support shorters behaviour, thats why its now banned.




You are deceiving yourself if you think shorters can drive the price down to 0 by themselves.

http://www.asx.com.au/data/shortsell.txt 

Disclosed figures show around 1~2% short on ASX majors. Even with double that in undisclosed shorts, that's seriously insufficient to crash a share.

Most super funds are down 10~20%, depending on leverage and cash holdings. While that will hurt retirement savings, I really doubt if that will cause retirees to lose their nest egg and rely on pensions.


----------



## Trembling Hand

psychic said:


> Tell me again how shorters benefit the community
> 
> 
> 
> Tax payers support shorters behaviour, thats why its now banned.




psychic Shorters are the ones buying when everyone else is selling. The people that move the big volume in shorts need weeks like the last one to buy back the stock. So when everyone has given up and selling the shorters are the one providing the buy orders to produce the market.

In oz the shorters are not banned. Just naked shorts. In the US & UK some stocks have been temporarily banned from short selling.

As for how they are good to the community. I have to say if you can't see how they play a part in the market mechanics you have a lot to learn about the function of a healthy market.

besides the fact that without shorts there would be no options market. They are essential for price discovery and value setting. Tell me what do you think about oil at $150 a barrel. Would you like the shots to be banned in the oil market as well?????


----------



## cuttlefish

nioka said:


> What I do know is that the real reason for a stock exchange existing is for it to be a vehicle for the provision and maintence of the financial needs of a productive society.




Nioka - I agree with a lot of the sentiment you express in relation to the purpose of the market and that as a general principle the products on offer in and around the market place should serve some productive function.

Where we differ is on a few points.

Firstly - shorting DOES NOT cause companies to fail or company share prices to collapse indefinitely - in the same way that massive buyups do not cause a company to succeed or a companies share price to rise indefinitely.

Bad businesses fail and good businesses succeed - and ultimately share prices move in line with the value of the business over the longer term. In the short term it can cause abberations but the prices of good companies will recover quickly in the same way that 'pump and dumps' on bad companies quickly lead to the price returning to its pre pumped level.

If a hedge fund 'attacks' the share price of a good business via a short selling campaign this provides a fantastic opportunity for fundamental investors because they can pick up a good business at significantly undervalued prices.

If a hedge fund 'attacks' the share price of a bad business via a short selling campaign this will not bother fundamental investors because they would already have taken their money out of the bad business recognising its price as over inflated vs its worth.

A while ago I started a thread on the topic that you raise  (titled "short selling serves no market function").   The responses I got led me to believe that it can be argued that short selling serves some function (as a sort of 'bubble meter') and also to allow options market makers to provide hedge products for investors.  As a result of that my main issue with short selling is both the lack of transparency surrounding it, and also the lack of risk management and awareness of risk of the stock lenders.  I do not believe that the counterparty risk involved in stock lending is being properly managed by the insitutions that are doing the lending of the stock to the short sellers.  I also believe the term 'stock lending' is a complete misnomer.

So more transparency and regulation should be provided around short selling - but to blame investors loss of money or share price collapses on short selling is incorrect.   As many have also pointed out - shorters need to buy back the stock they short sell.   If shorters attack a good business the price may recover quickly enough that the shorters end up actually driving the price up further through short covering squeezes.


----------



## Mooose

I said no to this. It is just another way of making money and good for all those who are smart enough to excute it properly


----------



## Trembling Hand

Here is a question I have been meaning to ask the Ban Shorting crowd.


Should shorting be Banned in the oil market?

If not why not?


----------



## mazzatelli1000

> I understand perfectly well why covered shorts are healthy for the market ..whateve r gave you the idea I didn't go back and read my posts properly and stop making a fool of yourself....






cordelia said:


> good post...well said...unemotional, factual but more importantly not aimed at insulting anyone...




You can learn from your own comments for a start.


----------



## It's Snake Pliskin

cordelia said:


> I understand perfectly well why covered shorts are healthy for the market ..whateve r gave you the idea I didn't go back and read my posts properly and   stop making a fool of yourself.....
> 
> Please show me where I have stated that covered short selling is not good for the market....




Cordelia,

Without attack I posted which was not directed at you. 

You don't short yourself as you have stated. 

I never said you didn't understand shorting.

Take it easy.


----------



## It's Snake Pliskin

psychic said:


> LOL, shorters drive the price down to zero and the mum and pops, end up with very little in their super accounts and end up relying more heavily on welfare (pensions).  The companies then go bust and the workers end up on welfare(unemployment).  Long-term depression, higher suicide rates etc etc.
> 
> Tell me again how shorters benefit the community
> 
> Tax payers support shorters behaviour, thats why its now banned.




Planet of the apes is a good movie for exposing myths and lies.


----------



## captain black

Here's the latest from ASIC:

http://www.asic.gov.au/ASIC/asic.ns...ered short selling not permitted?opendocument


----------



## freddy2

psychic said:


> LOL, shorters drive the price down to zero and the mum and pops, end up with very little in their super accounts and end up relying more heavily on welfare (pensions).  The companies then go bust and the workers end up on welfare(unemployment).  Long-term depression, higher suicide rates etc etc.
> 
> Tell me again how shorters benefit the community
> 
> 
> 
> Tax payers support shorters behaviour, thats why its now banned.




You do realise the stockmarket is a secondary market and driving the share price of a company down to zero, even if possible, cannot make a company go bust? A company going bust can drive a stock price to zero however.

This thread is just highlighting how much ignorance there is amongst the general investing public and how effective the misinformation campaign by those who really caused this crisis has been.


----------



## nioka

Can those supporting unrestricted short selling guarantee me that undisclosed short selling that targets a particular business can not be responsible for the price falling below a reasonable level.

Note that my objection is to those short selling stock that they DO NOT OWN or have control of. I believe short selling, correctly carried out, may have some insurance value for some investors.

Selling anything you do not own is FRAUD. If it is not then I have a harbour bridge in Sydney for sale. Any takers?


----------



## It's Snake Pliskin

nioka said:


> Can those supporting unrestricted short selling guarantee me that undisclosed short selling that targets a particular business can not be responsible for the price falling below a reasonable level.
> 
> Note that my objection is to those short selling stock that they DO NOT OWN or have control of. I believe short selling, correctly carried out, may have some insurance value for some investors.
> 
> Selling anything you do not own is FRAUD. If it is not then I have a harbour bridge in Sydney for sale. Any takers?




Nioka,
Read the link in Captain Black's post. It may make your day. Did I read it correctly? Does it really say that?


----------



## mazzatelli1000

nioka said:


> Can those supporting unrestricted short selling guarantee me that undisclosed short selling that targets a particular business can not be responsible for the price falling below a reasonable level.
> 
> Note that my objection is to those short selling stock that they DO NOT OWN or have control of. I believe short selling, correctly carried out, may have some insurance value for some investors.
> 
> Selling anything you do not own is FRAUD. If it is not then I have a harbour bridge in Sydney for sale. Any takers?




I short sell stock I don't own to hedge my deltas sometimes
Is there a problem??


----------



## nioka

freddy2 said:


> This thread is just highlighting how much ignorance there is amongst the general investing public and how effective the misinformation campaign by those who really caused this crisis has been.




It seems odd that if you oppose something you ar ignorant. I note that it seems to be the same people supporting short selling are the same ones that promote margin borrowing, another aspect of investing that has contributed to the downfall of many companies. I can remember being told I was ignorant when I opposed the notion of margin borrowing a year or so ago. 

I'm often wrong but there is one thing I am dead certain about. Margin borrowing of money that didn't exist and short selling by "fraudsters" is 99% responsible for the current financial problems in this world.


----------



## dhukka

freddy2 said:


> You do realise the stockmarket is a secondary market and driving the share price of a company down to zero, even if possible, cannot make a company go bust? A company going bust can drive a stock price to zero however.
> 
> This thread is just highlighting how much ignorance there is amongst the general investing public and how effective the misinformation campaign by those who really caused this crisis has been.





Here here, great post.


----------



## nioka

mazzatelli1000 said:


> I short sell stock I don't own to hedge my deltas sometimes
> Is there a problem??




YES.


----------



## captain black

It's Snake Pliskin said:


> .... the link in Captain Black's post. <>Did I read it correctly? Does it really say that?




It is correct, ASIC is extending the ban to covered short selling as well. I've seen some amazing things in my 40 years on this planet.... this ranks up there with the best of them....and on a Sunday night for goodness sake, talk about making it up as they go.


----------



## freddy2

nioka said:


> It seems odd that if you oppose something you ar ignorant. I note that it seems to be the same people supporting short selling are the same ones that promote margin borrowing, another aspect of investing that has contributed to the downfall of many companies. I can remember being told I was ignorant when I opposed the notion of margin borrowing a year or so ago.
> 
> I'm often wrong but there is one thing I am dead certain about. Margin borrowing of money that didn't exist and short selling by "fraudsters" is 99% responsible for the current financial problems in this world.




IMO excessive leveraging by executives with heads I win/tails you lose incentives is what caused this crisis, short selling is not. So I don't know where you got that all those in favor of short selling promote "margin borrowing". I have never short sold (or equivalent position) and I think short selling is good, as it can give me cheaper prices.


----------



## wayneL

nioka said:


> YES.




Sorry this is not an insult, it is just the truth. You are a fool if you think it is wrong to short sell to hedge delta. It would destroy the options market and cause outright crashes.

Evidence that your opinion is worthless. You are going on ignore.


----------



## skyQuake

nioka said:


> YES.




Do you know what delta hedging is?


----------



## It's Snake Pliskin

captain black said:


> It is correct, ASIC is extending the ban to covered short selling as well. I've seen some amazing things in my 40 years on this planet.... this ranks up there with the best of them....and on a Sunday night for goodness sake, talk about making it up as they go.




Thanks Captain. 

We are planet of the apes.

http://au.youtube.com/watch?v=YRNW7IkFpFY

http://au.youtube.com/watch?v=Jen6d8zlVI8


----------



## chops_a_must

nioka said:


> YES.



You are a moron outright.

Way to pour a liquidity crunch on the market at the same time as a credit crunch.

Move on grandpa.


----------



## cordelia

It's Snake Pliskin said:


> Cordelia,
> 
> Without attack I posted which was not directed at you.
> 
> You don't short yourself as you have stated.
> 
> I never said you didn't understand shorting.
> 
> Take it easy.




I apologise....I should have spent more time reading your post before replying so quickly...I am not in the habit of flaming but its easy for people to misunderstand and overact to what is posted on Internet forums without visual cues etc etc....However in my case there is absolutely no excuse since my background is research in online communication....


----------



## wayneL

I posted this in the options forum and is just as pertinent here so:

More consequences, glitches and Things That Make You Go Hmmmmm, from http://adamsoptions.blogspot.com/ (Ex market maker)



> A little confusion as to whether MM's have some sort of exemption to the New World Order.
> 
> Just heard on TV that an "Unintended Consequence" was the freezing up of options markets.
> 
> Unintended? C'mon Ben and Hank, I thought you read my site? We've gone over the topic a bit lately. Gives you real confidence how well they thought out this plan.
> 
> Well, a couple martini's later and the Options Market Makers Are Exempt! They can carry on their anti-American stock shorting with impunity again!
> 
> This from my fried Greg.
> 
> The Securities and Exchange Commission’s Division of Trading and Markets today issued the following statement:
> 
> “The Commission staff is recommending to the Commission a modification to its order prohibiting short selling in securities of specified financial firms. This modification would extend, for the life of the order, the exemption for hedging activities by exchange and over-the-counter market makers in derivatives on the securities covered by the order.”
> ​
> So we have that going for us.
> 
> Which is nice.
> 
> Seriously, it's good from the standpoint that at least they'll be able to sell puts now. But what if I want to sell them? I'm going to still need a better price if I can't short stock. So it's a bit of an untenable situation if the floor can sell them way better than anyone else.
> 
> *What about firms that are both options market makers and a million other different things. I'm looking at you Susquehanna. Are they going to wall off short sales in only stocks in which they make options markets? Which is probably everything.
> 
> Now that Pandora's Box is open, how about market makers in ETF's who need to sell baskets of stocks to hedge? Or anyone that buys a Convertible Preferred? Or......whatever, it's just too ridiculous on so many levels that they took this step. I mean the step of banning shorts altogether, not relaxing it a bit.
> *
> *Bottom line is it's all untenable.* What's going to happen when they walk us back out and allow shorting again? Would it have been so tough to actually enforce the rules to begin with?
> 
> Credit where due to some Bubblevision pundits. Liesman, Santelli, Haines, Faber, Rhatigan, come to mind All deviated from the usual party Cheerleading Line and called out the powers that be on this.


----------



## sam76

This thread went way above and beyond me very early on. 

looks like naked shorting has been banned and covering is being restricted as of tommorow on the ASX

http://www.asic.gov.au/ASIC/asic.ns...ered short selling not permitted?opendocument


----------



## CanOz

sam76 said:


> This thread went way above and beyond me very early on.
> 
> looks like naked shorting has been banned and *covering* is being restricted as of tommorow on the ASX
> 
> http://www.asic.gov.au/ASIC/asic.ns...ered short selling not permitted?opendocument




I think they say that _covered_ shorting is restricted...pretty much banned altogether.

Existing shorts must be allowed to cover (buy back) their positions at some stage.

Cheers,


CanOz


----------



## cordelia

wayneL said:


> I posted this in the options forum and is just as pertinent here so:
> 
> More consequences, glitches and Things That Make You Go Hmmmmm, from http://adamsoptions.blogspot.com/ (Ex market maker)




At the risk of looking like a complete idiot, could you please explain that in simpler terms...Its way over my head and I have very little knowledge of options but I am interested to know what the implications of this move by the ASX will be.


----------



## sam76

CanOz said:


> I think they say that _covered_ shorting is restricted...pretty much banned altogether.
> 
> Existing shorts must be allowed to cover (buy back) their positions at some stage.
> 
> Cheers,
> 
> 
> CanOz




You're right on second look.

One must read things twice before posting.

Apologies all.


----------



## chops_a_must

cordelia said:


> At the risk of looking like a complete idiot, could you please explain that in simpler terms...Its way over my head and I have very little knowledge of options but I am interested to know what the implications of this move by the ASX will be.



The ultimate conclusion is an illiquid market.

Because no-one is buying on a fall, and it is difficult to hedge for the big guys.


----------



## Trembling Hand

Trembling Hand said:


> OMG this is truly getting ridiculous.




When I posted this I didn't realize how absolutely stupefying this was going to get.

The really poor thing here is we are going to have a rip roaring rally on Monday that was already in the making and all the Muppets, fools, pollies and clueless punters are going to be left with the idea that it was the shorts all along.

Not the excessive leverage of junk assets to people that can't pay for it.

Mean while the secondary markets that the real money use to hedge, futs & options, will evaporate with that so will the big money. RIDICULOUSE.


----------



## wayneL

cordelia said:


> At the risk of looking like a complete idiot, could you please explain that in simpler terms...Its way over my head and I have very little knowledge of options but I am interested to know what the implications of this move by the ASX will be.




I'm about to nick off for an afternoon of fun and frivolity, will get into this a bit later.


----------



## nunthewiser

OK ...... CFD,s being an artificial market etc etc .......... by rights they should not be affected by this ban the shorts bullsheet and we can still trade these downward moves  via them ?


----------



## cordelia

wayneL said:


> I'm about to nick off for an afternoon of fun and frivolity, will get into this a bit later.




sounds like a perfectly sensible thing to do......have a good one


----------



## Trembling Hand

nunthewiser said:


> OK ...... CFD,s being an artificial market etc etc .......... by rights they should not be affected by this ban the shorts bullsheet and we can still trade these downward moves  via them ?




Who knows. I would guess DMA model is out. MM who knows. This is the silly thing. You can't just turn these things off. They are all connected to a normal market. A huge amount of transactions are arbitrage. have a look at the volume on Tuesday. That was arbitrage unwind. Have a look at the volume on the last Friday of each month that's delta hedging unwinding.

Most of the fut BOTs are arbitrage. If that market gets any thinner I will be able to manipulate it


----------



## nunthewiser

Personally think this rash" ban the short " move is going to have more ramifications than leaving the derivatives as they were ...... liquidity is sure going to be  intresting from here on in and woe betide us when these bigger fish decide to drop the bundle completely instead of trading there way through instead .... gawd help us i reckon and yes agree on TH earlier post re rally and the blind saying its because of the short ban ....... not going to profess i know the outcome from here but boy do believe that we are in for some intresting times with a LOT more market manipulation thrown in for good measure while the markets got no backround players


----------



## nioka

chops_a_must said:


> You are a moron outright.
> Move on grandpa.



 Guess it takes one to know one. I'd like to think I have been/are a successful moron. If you ever reach the stage I have reached then you can claim success too. (and I haven't had to take anyone down to get there.) I hope you can claim that when you "move on"

 My, isn't this thread getting personal when anyone with a different point of view is a moron.


----------



## nunthewiser

LOLOLOL just had a thought.. LOL whats twiggy gunna blame his companies poor share price on now ???? not the truth surely !


----------



## chops_a_must

nioka said:


> My, isn't this thread getting personal when anyone with a different point of view is a moron.



No, it's just when people comment on things they know nothing about, which makes them morons. 

Your comment was one of astounding stupidity.


----------



## Trembling Hand

nioka said:


> Selling anything you do not own is FRAUD. If it is not then I have a harbour bridge in Sydney for sale. Any takers?




Nioka this is where you are Blindingly wrong, IMHO .

The problem with this thinking is that If I did buy the harbour bridge off you (your short sell) the problem you have is that your broker will ask you at some time to return it(close the Trade).

And that just anit going to work. Because I know you have to and simply not sell it back to you. To short sell you have to have a LARGE Liquid market.

To compare short selling to stealing...... 

By the way. You ever used credit in any of your business?????????


----------



## subi1

chops_a_must said:


> No, it's just when people comment on things they know nothing about, which makes them morons.
> 
> Your comment was one of astounding stupidity.




I agree with Nioka.

You shouldn't be able to sell something that doesn't exist. If a company has a certain amount of shares they are the ones that should be traded not some that some big shot is allowed to add on to the market . 

How can it be fair if extra shares a created out of thin air which all market participants don't have equal access to.

There were reports of the big funds shorting a stock and then not having the stock to pay back. when they were overdue a small fine was imposed. How is this an equal market?


----------



## chops_a_must

subi1 said:


> I agree with Nioka.
> 
> You shouldn't be able to sell something that doesn't exist. If a company has a certain amount of shares they are the ones that should be traded not some that some big shot is allowed to add on to the market .
> 
> How can it be fair if extra shares a created out of thin air which all market participants don't have equal access to.
> 
> There were reports of the big funds shorting a stock and then not having the stock to pay back. when they were overdue a small fine was imposed. How is this an equal market?




Christ.

They are breeding.

Naked short selling accounts FOR LESS THAN 1% of all short sales, and it is ALREADY illegal!

The derision levelled at Nioka is about his comment about hedging to Delta, which is absolutely essential for all markets. Got it?

Without delta hedging, there is no market.


----------



## mazzatelli1000

nioka said:


> My, isn't this thread getting personal when anyone with a different point of view is a moron.




Not when you call people frauds and cheats while making a point (which was incorrect in relation to delta hedging).


----------



## Timmy

Wow – stunned by the news from ASIC.  Highlights a big challenge for regulators.  An activity regulated/banned in one market can switch to another market very quickly.  I think ASIC, reading their statement, may have thought they didn't have much choice but to suspend short selling as they have done.

Amazing to be a witness to this.  This is huge.

Who has a YouTube link for The Lunatics Have Taken Over The Asylum song.


----------



## skyQuake

Devils advocate - I say excessive shorting should be banned. 

If say a healthy financial company with moderate leverage gets pushed down 30%, that wouldn't affect its operations. But when its down 80%, debt covenants may get triggered, credit spreads will widen as the credit market starts to distrust the company, forcing it to borrow at higher costs, which scares investors into selling etc, forming a vicious cycle.

The example is extremely hypothetical as I don't see how you can have enough resources to push down a company so much that it gets completely screwed, but it would be nice to a limit on how much of a company can be shorted.


----------



## Shrewd Crude

Shorting must not be banned... shorting is a way for Investors to Reduce their risks of their portfolios by hedging bets...
by taking away this ability for investors to short sell, The FED and other Central banks have taken away the opportunity to reduce portfolio risk profiles...

.^sc


----------



## Datsun Disguise

Seems that the world gov's aren't logging on to ASF..... Yes, shorting is now built into the financial systems and mucking with it might not be the smartest thing to do - bit like an eco system, kill the rabbits with mixo or caleysee(sic) and then your native birds of prey starve to death...

I wonder if this move, for nothing other than to label a scapegaot, will be looked upon in future as the catalyst for something bigger and badder...? 

But still, I am not a supporter of short selling, it can and does have a massive impact on markets. Changes happen faster and it turns holders into sellers, even if they don't want to be or even know they've become a seller. Sure the shorters have to become buyers again, but at what point? I think it all drives unheatlthy volatility- great for scalpers, not for orderly markets.

A question that I struggle with is why my super fund (and yours) takes a fee and lends their shares to a hedge fund who is going to sell those shares, therefore putting downward pressure on the very asset that the super fund is holding on my behalf? Something I am going to put to my trustees this week - members best interest? Doesn't sound like it to me. 

Now an actual question - what happens if a short seller sells shares in a company that subsequently goes under? I suppose that is it, holder gets nothing, (except the short fee) shorter gets the profit?

Interesting times


----------



## chops_a_must

Datsun Disguise said:


> Now an actual question - what happens if a short seller sells shares in a company that subsequently goes under? I suppose that is it, holder gets nothing, (except the short fee) shorter gets the profit?



How?

If the shorter can't close out it means they get nothing.


----------



## skyQuake

Datsun Disguise said:


> A question that I struggle with is why my super fund (and yours) takes a fee and lends their shares to a hedge fund who is going to sell those shares, therefore putting downward pressure on the very asset that the super fund is holding on my behalf? Something I am going to put to my trustees this week - members best interest? Doesn't sound like it to me.




Most super funds have a constituion that doesnt really permit them to sell. Maybe to rebalance, but straight position exiting is difficult. Eg. A conservative fund will have 50% in cash +-10%, and their trust deed or even legislation that wont allow them to sell. Since they're holding for the long Long LONG term. 
I guess its fair to say they might as well lend it out and make some extra returns off the side.


----------



## Datsun Disguise

chops_a_must said:


> How?
> 
> If the shorter can't close out it means they get nothing.




Makes perfect sense now you say it. So then as a dying company that's been shorted all along it's fall nears the end we would then see the shorts being closed, perhaps causing appreciation of the share price. Trap for T/A's  and bottompickers!


----------



## Datsun Disguise

skyQuake said:


> Most super funds have a constituion that doesnt really permit them to sell. Maybe to rebalance, but straight position exiting is difficult. Eg. A conservative fund will have 50% in cash +-10%, and their trust deed or even legislation that wont allow them to sell. Since they're holding for the long Long LONG term.
> I guess its fair to say they might as well lend it out and make some extra returns off the side.




Thanks for the detail - brings something else to mind, if the trust deed says 'CAN'T SELL' then could shorting be argued to be against the trust deed as well? have to re-draft my letter now.

Last comment - early start tomorrow - this is all going to be very interesting over the next week or so as the consequences of shutting down one part of the fin mkts become more apparent. I don't know enough about it to look in the crystal ball but I will be watching closely to learn a thing or two - this thread has already helped out hugely!

And remember, if you've called someone, or been called, a moron there's always the PM's to make up nice and proper like. Peace and love to all.


----------



## IFocus

Trembling Hand said:


> Nioka this is where you are Blindingly wrong, IMHO .
> 
> The problem with this thinking is that If I did buy the harbour bridge off you (your short sell) the problem you have is that your broker will ask you at some time to return it(close the Trade).
> 
> And that just anit going to work. Because I know you have to and simply not sell it back to you. To short sell you have to have a LARGE Liquid market.
> 
> To compare short selling to stealing......
> 
> By the way. You ever used credit in any of your business?????????




I wonder if the stocks Futs might see more volume the SPI might also get a bit more


----------



## Smurf1976

Those pesky fire engines blocking the streets, wasting water and so on are a nuisance threatening us all.

I propose to overcome this problem by banning the use of fire alarms in all major city buildings, particularly theatres, department stores and anywhere that petrol is stored. 

This measure will greatly improve safety and the orderly running of the city through the avoidance of dangerously parked fire engines, hoses left where pedestrians can trip over them and so on. We'll get rid of all that by simply removing the alarms which are responsible for fire brigades turning up all over the place.

Now, the above load of stupidity is comparable to banning short selling to prevent share prices falling. There's a reason why fire alarms go off and that reason is much the same as why stocks get shorted to oblivion - there's something more fundamentally wrong. Short sellers have, in practice, done little more than hurry up the activation of the alarm in a financial system that was already on fire. 

A better target would be to point the finger at whoever spent the past few years filling the place full of explosives and other highly flammable stuff in the first place. Oh, that's right, they're the ones going broke now the whole lot's  blown up in their faces - a situation that anyone with even a basic grasp of risk should have known was likely at some point. 

It's a classic case of short term pursuit of profit that was near certain to end in disaster at some point. That's what happens when you scale up the consequences of even the slightest mishap to the max (filled with explosives / massive leverage / liar loans). Sooner or later you get that mishap and then it all blows up real quick.

Sooner or later, something goes wrong. Always has and always will. That's the lesson to be learnt here - never bet the farm or one day you'll lose it.


----------



## misterS

chops_a_must said:


> Christ.
> 
> They are breeding.
> 
> Naked short selling accounts FOR LESS THAN 1% of all short sales, and it is ALREADY illegal!
> 
> The derision levelled at Nioka is about his comment about hedging to Delta, which is absolutely essential for all markets. Got it?
> 
> Without delta hedging, there is no market.




Chops - Where can I find this fact that naked shortselling is less than 1% of all sales - haven't seen your reference or the date.


----------



## cordelia

subi1 said:


> I agree with Nioka.
> 
> *You shouldn't be able to sell something that doesn't exist. If a company has a certain amount of shares they are the ones that should be traded not some that some big shot is allowed to add on to the market . *
> 
> How can it be fair if extra shares a created out of thin air which all market participants don't have equal access to.




Look herein lies the problem..*.NOT ALL SHORT SELLING IS ABOUT SELLING SHARES THAT DON'T EXIST....PLEASE FOR THE LOVE OF GOD WILL SOMEONE EXPLAIN THIS!!!!!!!AND I AM NOT RELIGIOUS BTW
*


----------



## cuttlefish

misterS said:


> Chops - Where can I find this fact that naked shortselling is less than 1% of all sales - haven't seen your reference or the date.





The asx web site has a list of short positions on approved short selling stock:

http://www.asx.com.au/data/shortsell.txt 

Most are under 1%, highest is around 2.5%


----------



## subi1

cordelia said:


> Look herein lies the problem..*.NOT ALL SHORT SELLING IS ABOUT SELLING SHARES THAT DON'T EXIST....PLEASE FOR THE LOVE OF GOD WILL SOMEONE EXPLAIN THIS!!!!!!!AND I AM NOT RELIGIOUS BTW
> *




Yeah. I think I understand that.

It is just that is the part of shorting that disgusts me. I think it creates an unfair advantage for people using that method and has no ongoing benefit to the market and it's participants

Thanks.


----------



## cuttlefish

The ASX banning short selling but then allowing only market makers to short sell is ridiculous.  Talk about an unlevel playing field.  (Not that it is anyway but that is blatant).

Also how about trumpeting some rule changes to market participants - i.e. normally a change like this would go through a review process and be flagged to market participants at least several weeks in advance. Not knee jerk reactions deciding to change the rules on a Friday afternoon for the next Monday. How is that fair to the people that do have legitimate open short positions or are trading on the basis of one set of rules.

And why does Australia have to follow America's stupidity every step of the blinking way in this universe?

ASIC is a joke.  So is the self regulated ASX.


----------



## korrupt_1

Some have asked what's the situation about shorting  CFD's?

This was released on IG Markets Website





> *Short Selling FAQs*
> 
> *What is the new policy?
> *On 18 September 2008 the FSA decided to prohibit the creating or increasing of a short position in a total of 29 UK quoted banks, general insurance and life assurance companies.
> 
> *What are the specific shares that I cannot sell short?*
> A full list of affected stocks can be found here.
> 
> *How long will these restrictions last?*
> The regulation ceases to have effect on 16 January 2009.
> 
> *What if I already have an existing short position in one of the affected stocks?*
> You can keep your position open but you cannot increase your short position any further. Under certain circumstances when borrowing restrictions arise, as detailed in our Customer Agreement, this may not be the case and your position may have to close prematurely.
> 
> *Could I mistakenly open a new short position in one of the affected stocks?*
> We have adjusted our systems to impose restrictions on the affected stocks; but, it remains your own responsibility to make sure you do not breach the FSA's requirements.
> 
> *Will I have any difficulties closing long positions on any of the affected stocks?*
> No, selling to close an open position is not short selling and is completely unaffected by these changes.
> 
> *Can I go short on any other stock?*
> Yes, there are no new restrictions on any other stocks. The only stocks affected are those named in the above attachment.
> 
> *What if I already hold an existing short position in a stock not included in the list?*
> These are unaffected. You can keep your position open until it expires or you choose to close it.
> 
> *Will I have any difficulties closing other long positions on non-affected stocks?*
> No, there are no issues closing existing long positions.
> 
> *Are other markets outside of the UK going to be affected?*
> Yes, the US regulator announced similar measures on Friday 19 September 2008. We will update our current rules in line with regulatory changes as any new restrictions are applied. This will affect the availability of certain stocks to be sold short, as in the UK. Similar announcements have been made regarding the Irish and Swiss exhanges and there may be more announcements to follow.


----------



## cuttlefish

chops_a_must said:


> Christ.
> 
> The derision levelled at Nioka is about his comment about hedging to Delta, which is absolutely essential for all markets. Got it?
> 
> Without delta hedging, there is no market.





This is an equally deluded comment.  If you do not believe the market can exist without delta hedging you are as 'moronic' as you claim nioka to be.  Yes - removing the ability to hedge changes the dynamics of the market - but no - it will not destroy liquidity and cause the market to dry up.


I for one find your personal insults to nioka and others very disrespectul - maybe you need to get rid of the god complex and learn some basic manners.  Its quite possible to debate a point without resorting to that level.


----------



## tayser

http://business.theage.com.au/business/asic-bans-all-shortselling-20080921-4l1f.html

*ASIC bans all short-selling*

* Eric Johnston
* September 22, 2008

THE Australian Securities and Investments Commission has dramatically widened its crackdown on short-selling, banning the practice across the entire sharemarket for at least a month as a "circuit breaker" to restore confidence.

But the stance has stunned local investors, who warned that market turmoil was likely to follow, given the ban could effectively shut down options and derivatives trading.

The Australian position goes further than US and British regulators, which last week detailed measures to ban short-selling on financial stocks only as part of efforts to prevent wild swings on global bank shares.

Australian and other European regulators followed with their own bans on short-selling on financial stocks, helping to spur the international rally in shares, including a 3.3% surge on Wall Street on Friday.

But last night ASIC widened its ban to include all shares, fearing that restrictions on short-selling on other exchanges would intensify risks on the Australian market.

Short-selling ”” the practice by hedge funds and other speculators selling shares they don't own in the hope of buying them back later at a lower price to create a profit ”” has been blamed for creating excessively volatile market conditions and undermining the price of bank and other financial equities.

ASIC chairman Tony D'Aloisio said the speed at which global capital travelled and the relatively small size and the structure of the Australian market meant that it was necessary to extend the prohibition to all shares.

"To limit the prohibition to financial stocks, as has been done in the UK, could subject our other stocks to unwarranted attack given the unknown amount of global money which may be looking for short-sell plays," Mr D'Aloisio said.

It is believed ASIC had also been concerned about the blurred nature of local financial shares such as Babcock & Brown, which would not have been covered by a direct ban on financial stocks.

Mr D'Aloisio said a circuit breaker was needed to boost confidence.

ASIC said it would reassess in 30 days whether to permit short-selling for non-financial shares. But the ban on financial shares would remain until limits imposed by other international regulators were removed.

Tom Elliott, a hedge fund manager with MM&E Capital, warned: "A lot of firms have positions they need to hedge. If they can't hedge them they will have to dump them into the market."

Treasurer Wayne Swan last night backed the ban, describing the measures by ASIC as an appropriate response to global financial market turbulence. "They will help protect investors as well as the integrity of our financial markets," he said.

Securities and Derivatives Industry Association head of policy Doug Clarke said the market was likely to treat the ban with caution.

"It's an extraordinary move," he said. "The speed in which it came through ”” especially on the back of Friday night's exemptions ”” is a surprise."


----------



## Trembling Hand

cuttlefish said:


> If you do not believe the market can exist without delta hedging you are as 'moronic' as you claim nioka to be.  Yes - removing the ability to hedge changes the dynamics of the market - but no - it will not destroy liquidity and cause the market to dry up.




All Market makers run on some sort of Delta hedge. Remove that and you will find your options very very expensive. As well as a lot thinner as it removes many strategies that the average punter can use to be part of the options market.

Same with the Futures. If you remove one side of arb trades there is nothing to stop Mr HedgeFund throwing a couple of thousand contracts around to do as he please. Our Futs and options markets are already the thinnest in the world. Remains to be seen what will happen, but my guess is it will not help them.


----------



## Aussiejeff

Yikes. I really feel for anyone caught with their once-legit Friday Night shorts down...

Given that covered shorting WAS totally legal under the previous ASX rules, it totally sucks that anyone making trades under that system should wake up today and find they can no longer "cover" what they may have shorted legitametely on Friday. They could stand to lose a bucket-load IF the share prices of the stock they had shorted subsequently goes way north over the next 30 or so days.

I'm also a bit hazy on another aspect. How long are shorters allowed to hold a short position without closing for cover - as in - if ASIC decides to extend the ban for, say, another 3-6 months? Will existing shorters be totally "caught short" and forced to cough up regardless of their potentially massive losses? 

Hmmmm.

Ideally, the ASX, ASIC should have given at least 7 days notice before dumping this onto the heads of legit shorters. I can understand why many are feeling just a tad mortified! Fortunately for moi, I am not holding any shorts atm.

The other thing to note is that banning shorts will not stop the mind games you see every day with the market depth screens. You know what I mean. Just before open you see a massive increase in SELL or BUY orders .... does this mean the share is going to go up or down at open, during the day or what? Often, as an observer only, you can see those large BUY or SELL orders get manipulated as bit players get spooked and DO buy or sell, presumably based on the "pressure" being applied by the queues of significantly increased BUY or SELL orders.

I'll be honest and say I got caught with that trick a few times when starting out in the share market. Once I realised that what I was looking at in the depth of trade screens was essentially a BIG POKER GAME playing out in real time, I became a bit more savvy and less likely to "follow the herd" on what appeared to be sudden significant changes in sentiment for a share - which would just as quickly "mysteriously" evaporate during the day leaving you holding the can as it were, while someone who had the balls to show big "bets" on the BUY/SELL depth screens sat back laughing all the way to the next day's trading while the "little fish" fried themselves!   

So, I don't think banning shorts will stop the big poker game, eh? Otherwise, the WHOLE ONLINE SYSTEM of share trading would have to be unplugged. 

Bsck to paper scrip maybe? Post and snail mail trading only? No wires either (too fast - might be too volatile)?

I think I'll go take a couple of Panadol on behalf of all those once-legit shorters (now quasi-illegal ratbags) and settle in for the mornings trading, purely as an OBSERVER.


Chiz?



aj

PS: Another thought just sprung to mind - I wonder how all this will now be incorporated into exisitng trading law? Would I be right in expecting some BIG lawsuits to come out of this...ie to test the "legality" of the no shorts bombshell??


----------



## Trembling Hand

Jeff they are not stopping you closing your short trades just stopping you putting new ones on.


----------



## Aussiejeff

Trembling Hand said:


> Jeff they are not stopping you closing your short trades just stopping you putting new ones on.




Ah! Thanks for clearing that up.... still, it might likely result in shorters being "forced" to close (today, this week??) at a significant loss? Or can they risk holding their shorts for as long as it takes this mess to be sorted out (ie after a slew of lengthy court cases?)


----------



## Greg71

For what it's worth, I believe short selling should be removed from the market.
Downward moves would be from those selling shares/ taking profits. 

If they want to trade the down moves, then people can use options or cfd's.


----------



## Trembling Hand

Greg71 said:


> For what it's worth, I believe short selling should be removed from the market.
> Downward moves would be from those selling shares/ taking profits.
> 
> If they want to trade the down moves, then people can use options or cfd's.




Bloodieeee heeellll!!

Without shorting there is no derivatives market!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Tell me shoud we also remove shorting in the oil market??


----------



## Trembling Hand

Bucket shops are still taking shorts.


----------



## ice

FWIW I believe markets should be left alone to sort it out for themselves but I can see the appeal of blaming a bogeyman for all the markets' ills.
However be careful what you wish for. I believe Asic's action today will be the genesis of a massive stockmarket crash within the next few weeks.

Have a nice day 

ice


----------



## Temjin

Greg71 said:


> If they want to trade the down moves, then people can use options or cfd's.




Well, they could be gone now.  Perhaps they should guarantee that stocks prices should only ever rise by at least 10% p.a. and ban all selling of any sort to prevent them from producing a negative return. Free capitalism for all! 

This is crazy! And I bet a lot of those mainstream punter (like retirees or soon to be) will start celebrating. 

I agree with ice, this sort of action will have serious implication over the coming weeks.


----------



## Joe Blow

chops_a_must said:


> No, it's just when people comment on things they know nothing about, which makes them morons.




Chops - Lets drop the personal attacks and stick to discussing the topic at hand. These kind of remarks only serve to turn a reasonable discussion into a mudslinging match. Not constructive.


----------



## cuttlefish

Trembling Hand said:


> All Market makers run on some sort of Delta hedge. Remove that and you will find your options very very expensive. As well as a lot thinner as it removes many strategies that the average punter can use to be part of the options market.
> 
> Same with the Futures. If you remove one side of arb trades there is nothing to stop Mr HedgeFund throwing a couple of thousand contracts around to do as he please. Our Futs and options markets are already the thinnest in the world. Remains to be seen what will happen, but my guess is it will not help them.




Cheers TH - yes I do understand the delta hedging and that options MM's need to use it - and unless there's something wrong with my options depth screen I'm certainly not seeing much in the way of spreads being provided around the bank stocks options at the moment.  It will interesting for me (who doesn't understand the extent of the impact) to see whether the volatility increase that has occurred today as a result of this change settles down or not and how the options market liquidity behaves.   

But my point is that the market can actually exist without derivatives - just in a different form - i.e. less liquidity, and possibly more volatility.  

(I also wasn't offering an opinion on whether the ban is a good move or a bad move - just countering chops point that the markets can't exist without short selling).  

I certainly think the way the ban has been implemented - as an overnight thing - is highly irresponsible to anyone with open large trades - be they individuals, MM's or hedge funds - and that if they are going to implement a ban like this they should have gone through a communication and preparation process.


----------



## Calliope

As somebody who received the annual statement from my superannuation fund informing me of massive lossses and charging me a hefty fee for performing this service for me, I feel that I have an interest in this debate.

I will let Adele Ferguson (www.theaustralian.com.au) in todays paper put my side of the case.



> Under Superannuation legislation, the SIS Act, funds need to exercise  the "degree of care skill and diligence as an ordinary prudent person would exercise in dealing with property of another for whom the person felt morally bound to provide"
> 
> It is the use of super funds' stock for short selling that has caused so much debate, and should give us pause to consider the amount of money Australia's super funds have lost this year and how much the practice of stock lending has inadvertantly worked against the return of super funds




She also says;  







> Most Australians have no idea that the $1 trillion superannuation industry warehouses its funds with "custodian" companies, which often offer a discount for the service if the fund allows the stock to be lent to third parties, usually hedge funds, which then proceed to destroy the value of the underlying securities that the investor owns.




I don't think very many super fund contributors voted in this poll.


----------



## Trembling Hand

My guess is that the effect will be less volume if this isn't resolved in some way. Less volume is always bad. At some point it tips over the ledge and you end up with a non-function market.

Thinking about it with a level(er) head the ASX had no option but to ban shorts once the US & UK did.

Imagine if the Aussie stocks where the only financials in the western Bourses that you could short. 

That said it has been a complete balls up as far as implementation and they should of got control of the naked shorts a long long time ago. Now the silly punters believe that the cause of the worlds ills are short sellers!! the post above me is a perfect example


----------



## It's Snake Pliskin

the latest vid from Don:

http://au.youtube.com/watch?v=P7A10FGieYA


----------



## Calliope

I think that genuine investors (or mug punters as Trembling Hand considers them) are entitled to feel annoyed when their retirement investments are gutted by the actions of predatory short sellers. Naturally the predators think otherwise.


----------



## Trembling Hand

Calliope said:


> I think that genuine investors (or mug punters as Trembling Hand considers them) are entitled to feel annoyed when their retirement investments are gutted by the actions of predatory short sellers. Naturally the predators think otherwise.




Ah! Come on. Is the fact that shares have been falling because of the existence of short sellers (who have been around longer than the ASX has)???

or,

that the fundamentals of the economy have changed and the change was brought about by reckless central bankers, greedy selfish investment banks and people who have binged on credit they cannot afford.

Come on answer the question?? which one is it????


----------



## Timmy

Short sellers (predatory or otherwise) will have their asses handed to them if they short strong, good value companies.  Genuine investors (Mug punters or otherwise) would be better directing their annoyance at the sharks, liars and spivs spruiking dodgy company practices while masquerading as company directors.


----------



## nioka

Trembling Hand said:


> Ah! Come on. Is the fact that shares have been falling because of the existence of short sellers (who have been around longer than the ASX has)???
> 
> or,
> 
> that the fundamentals of the economy have changed and the change was brought about by reckless central bankers, greedy selfish investment banks and people who have binged on credit they cannot afford.
> 
> Come on answer the question?? which one is it????




 Both , and the second more than the first but that does not alter the fact regarding the damage caused by dodgy short selling in recent times.


----------



## prawn_86

Timmy said:


> Short sellers (predatory or otherwise) will have their asses handed to them if they short strong, good value companies.  Genuine investors (Mug punters or otherwise) would be better directing their annoyance at the sharks, liars and spivs spruiking dodgy company practices while masquerading as company directors.




Fantastic post Timmy.

Well worth repeating


----------



## Trembling Hand

nioka said:


> Both , and the second more than the first but that does not alter the fact regarding the damage caused by dodgy short selling in recent times.




Besides the hysteria from the media there isn't any actual Facts about short sellers. The covered short list gives no clues to an increase in shorts.

Will be interesting the next 30 days. No shorts at all. The balance has been given completely to the longs. You would think at the end of that period "fair value" will be well and truly restored. Will be funny if its at the same level as it is today. 3% higher than when shorts were manipulating the market.


----------



## It's Snake Pliskin

Trembling Hand said:


> Besides the hysteria from the media there isn't any actual Facts about short sellers. The covered short list gives no clues to an increase in shorts.
> 
> Will be interesting the next 30 days. No shorts at all. The balance has been given completely to the longs. You would think at the end of that period "fair value" will be well and truly restored. Will be funny if its at the same level as it is today. 3% higher than when shorts were manipulating the market.




The apes will be running around with new mantras.


----------



## mazzatelli1000

It's Snake Pliskin said:


> The apes will be running around with new mantras.




You mean they will go ape ****?!?!


----------



## chops_a_must

Trembling Hand said:


> Come on answer the question?? which one is it????



My abusive comment still stands.


----------



## Green08

"Institutional money managers will not have to disclose their short positions to the public immediately, the U.S. Securities and Exchange Commission said on Sunday.

Under the SEC's emergency rule, *the information will be made public two weeks after it is filed electronically to the commission, *the agency said in a statement.

The new order will take effect at 12:01 a.m. ET on Monday, September 22, the SEC said." - By CNBC.com With Wires | 21 Sep 2008 | 07:35 PM ET


----------



## bankit

The below is not what you want to hear if you have current short CFD positions that you want to keep.

Talk about minefields lately

Dear Client, 
Due to ASIC's prohibition on short selling ASX listed shares, MF Global is experiencing higher stock recalls from our stock lenders than usual. Correspondingly, therefore, please note that MF Global may have to recall certain existing short CFD positions held by our clients.MF Global will use best endeavours to contact affected clients with existing short CFD positions, but you should be aware that this may not always be possible. 
Kind regards, 

*RICHARD AVERY-WRIGHT* 
*HEAD OF CFDs *
*MF GLOBAL AUSTRALIA LIMITED* 
*p. 1800 626 099* 
*e. cfds@mfglobal.com.au *
*www.mfglobal.com.au*


----------



## Trembling Hand

Trembling Hand said:


> Here is a question I have been meaning to ask the Ban Shorting crowd.
> 
> 
> Should shorting be Banned in the oil market?
> 
> If not why not?




Bump.............................Anyone???


----------



## nomore4s

Well what an interesting few days. But I must admit I have learnt a few things.

* The media has more power than I'd given it credit for. There are alot of people who obviously believe everything the media says and some of them are the decision makers who can change things as they see fit

*There are alot of people who invest/trade the markets but real have no understanding of how the markets really work or the true risks involved.

*Most investors seem to think the stock market should only go in one direction - up, no matter what the fundamentals or commonsense might be telling them.

*If the stockmarket or share you've invested in doesn't go up it is obviously being manipulated by big bad hedge funds or morally corrupt short sellers.

*The world is full of more idiots than I thought.

There was alot of ears pinned back buying today imo, it would seem alot of people now seem to think the worst is over because short sellers can longer push prices down.


----------



## chops_a_must

nomore4s said:


> *The world is full of more idiots than I thought.



One of my favourite sayings, "Never underestimate the power of people's stupidity."

Go Hawks.


----------



## chops_a_must

Trembling Hand said:


> Bump.............................Anyone???




Nah.

Only delta hedging TH.


----------



## Wysiwyg

It`s only the short sellers (minority group) whining about the ruling which means they will have to revue their trading strategies and conform with the new ruling.


----------



## Trembling Hand

Wysiwyg said:


> It`s only the short sellers whining about the ruling which means they will have to revue their trading strategies and conform with the new ruling.




 yeah like not short an overvalued company because its not "fair" that a stock goes down.


----------



## chops_a_must

Wysiwyg said:


> It`s only the short sellers whining about the ruling which means they will have to revue their trading strategies and conform with the new ruling.



It's not.

Dhukka and Prawn are also annoyed.

Because it means they can't get fair value and prices are artificial.

Why would anyone with a clue want to buy something if they think it is artificially being held up?


----------



## nioka

chops_a_must said:


> My abusive comment still stands.




 As do my replies. Let future history answer the question. Today's trading was on my side but I'm not gloating as there is a long way to go yet.


----------



## Timmy

nomore4s said:


> *The world is full of more idiots than I thought.




OMG 4s - you didn't get short idiots did you???????


----------



## Wysiwyg

Trembling Hand said:


> yeah like not short an overvalued company because its not "fair" that a stock goes down.




Tut tut  rules are rules.


----------



## mazzatelli1000

nomore4s said:


> Well what an interesting few days. But I must admit I have learnt a few things.
> 
> * The media has more power than I'd given it credit for. There are alot of people who obviously believe everything the media says and some of them are the decision makers who can change things as they see fit




I think the decision makers are just making the right moves to calm down the misinformed or "fools" as some here have described them.


----------



## chops_a_must

nioka said:


> As do my replies. Let future history answer the question. Today's trading was on my side but I'm not gloating as there is a long way to go yet.



Ok... do that.

But answer TH's question before you go.


----------



## nomore4s

chops_a_must said:


> Go Hawks.




Yep looking forward to Saturday.



Timmy said:


> OMG 4s - you didn't get short idiots did you???????




lol, I was but was forced to close the trade out because my brokers lent stock was recalled, apparently there is alot of demand for them now.


----------



## cuttlefish

bankit said:


> The below is not what you want to hear if you have current short CFD positions that you want to keep.
> 
> Talk about minefields lately
> 
> Dear Client,
> Due to ASIC's prohibition on short selling ASX listed shares, MF Global is experiencing higher stock recalls from our stock lenders than usual. Correspondingly, therefore, please note that MF Global may have to recall certain existing short CFD positions held by our clients.MF Global will use best endeavours to contact affected clients with existing short CFD positions, but you should be aware that this may not always be possible.
> Kind regards,
> 
> *RICHARD AVERY-WRIGHT*
> *HEAD OF CFDs *
> *MF GLOBAL AUSTRALIA LIMITED*
> *p. 1800 626 099*
> *e. cfds@mfglobal.com.au *
> *www.mfglobal.com.au*





So superannuation companies are conservatively lending the stock that they hold on behalf of current and future retirees to retail punters to play the short selling game.  Why doesn't that surprise me.   

Why does anyone, ever, trust their money to an investment company is what I find more surprising.

It will be interesting to see if there are any ramifications to the unwinding of this.  I can't imagine why anyone would use CFD's in the first place except possibly for short trading so I'd imagine the CFD's providers aren't exactly raking the money in at the moment.  I hope the super companies that lent stock to them are comfortable they are good for it if the CFD punters aren't.


----------



## jono_oz

And here I thought that the true value of a company was determined buy economics, supply, demand and balance sheets - when its obvious that only short sellers really know the true value of a company!  

All hail the short sellers.... whats left of them. :


----------



## mayk

Please do not get overly excited and tease the shorters as (in Arnold words) THEY WILL BE BACK. 

I am afraid this is the first time a bear market rally has been timed for 30 days.... This will one big sucker rally.


----------



## Calliope

Trembling Hand said:


> Come on answer the question?? which one is it????




I was just puting forward a point of view. It was not my intention to join the debate. If contrary points of view upset smartarses and know-it-alls, that's their problem, not mine.


----------



## fordxbt

30 days of making some long $$$..then its back to the shorts for $$$ !


----------



## johenmo

mit said:


> I remember reading somewhere that nobody has ever shown that shorters were responsible for driving the price of a stock down




From Business Spectator, today:
"Along those lines, one stock that is likely to fall today is that of the ASX itself; the difference between last week’s trading volumes and this week’s will give us an idea of the extent of activity based on short selling. It won’t be insignificant."

Be worth a look.


----------



## Trembling Hand

johenmo said:


> From Business Spectator, today:
> "Along those lines, one stock that is likely to fall today is that of the ASX itself; the difference between last week’s trading volumes and this week’s will give us an idea of the extent of activity based on short selling. It won’t be insignificant."
> 
> Be worth a look.




Being the know it all and smart **** I am that's going to look a little silly. Last week was Futs rollover. We will not get another high volume week like that for another 3 months.

Either he doesn't know that and is the fool that I have always accused him of or he does know that and is deliberately lying.


----------



## lusk

martraci said:


> 30 days of making some long $$$..then its back to the shorts for $$$ !




Do you think the "short covering" rally or what ever the excuse is for it going up will last for 30 days? 

They have not banned selling for 30 days.................yet


----------



## skyQuake

lusk said:


> Do you think the "short covering" rally or what ever the excuse is for it going up is going to last for 30 days?
> 
> They have not banned selling for 30 days.................yet




Asic announced they will review it in 30 days. So maybe even longer?...

Anyways after 5 days or so we're gonna find a new equilibrium in an artificial market without short sellers. Derivatives traders know this and will just go with the flow. After the allocated period of grace is over, watch out below...


----------



## mit

Trembling Hand said:


> Besides the hysteria from the media there isn't any actual Facts about short sellers. The covered short list gives no clues to an increase in shorts.
> 
> Will be interesting the next 30 days. No shorts at all. The balance has been given completely to the longs. You would think at the end of that period "fair value" will be well and truly restored. Will be funny if its at the same level as it is today. 3% higher than when shorts were manipulating the market.




I think that the market will get more volatile.  As we are not seeing any new trillionaires floating around short sellers are probably losing slightly less as they are winning so you are suddenly reducing liquidity in the market.

If there is the run on a particular share, you wont have short sellers covering their shorts and then possibly no buyers.

Having sad that, I think that Rudd had no option, you don't want to be the only country allowing shorting


----------



## dutchie

In the news Kevin Rudd said that banning short selling will stop the manipulation of stocks.

Thank god for that, it will be heaven to deal in a market that is not being manipulated!!


----------



## Trembling Hand

mit said:


> Having sad that, I think that Rudd had no option, you don't want to be the only country allowing shorting




Yep that is true. Once one did it they had to follow.


----------



## James Austin

it's very easy to get emotional about money. to counter this tendency i like to do the figures, see what the numbers say. which brings me to TH's quote.

it would be interesting to know what % of an XJO fall, in any given period, is actually atributable to shorting VS selling. 

any one actually know, or is this a bit of a witch hunt






Trembling Hand said:


> Besides the hysteria from the media there isn't any actual Facts about short sellers. The covered short list gives no clues to an increase in shorts.
> 
> Will be interesting the next 30 days. No shorts at all. The balance has been given completely to the longs. You would think at the end of that period "fair value" will be well and truly restored. Will be funny if its at the same level as it is today. 3% higher than when shorts were manipulating the market.


----------



## wayneL

Don't look now, but it looks like those wicked manipulating short sellers have migrated over to NYMEX and are buying up oil.

Evil bast*rds....evil!


----------



## misterS

Robert Gottleibsen says shorting is alright - just got a bit out of hand by the time a trillion dollars was devoted to it.  

His article Business Spectator 22 Sept 2008 

Shocking the short-sellers. 

"A decade or two ago when the hedge fund industry first developed its shorting practices, they served a useful function in the market by smoothing out rises and falls. It enabled investors to protect long investment positions and engage in reasonable trading activity.

But the avalanche of capital into the hedge fund industry became so large – probably around $1 trillion dollars if gearing is included – that they were required to take bigger and bigger risks. And in a bear market the risks had to be on the short selling side, because picking stock winners had become a very tough game.

And so a vicious corporate destruction system was developed to make money and the best targets emerged as global banks, although as we will see below, Australia was not immune. 

In the end, when the hedge funds took on the banking system it forced the authorities to act and bring the whole game to an end. 

Over time, sensible people will find a way of returning to the original purpose of short selling, but first the vicious games have to end. Meanwhile shorting hedge funds are going to lose a lot of money which will be accelerated by the inevitable runs on their money as those who can get their money out do so. 

The vicious practice that the hedge funds devised was to locate a highly leveraged company – it could be any trading company, investment house or even a bank. The funds would undertake incredible research looking for a weakness. Sometimes they would discover that there was a weakness in the way a major shareholder had borrowed to buy stock, so that if the shares were driven low enough, the major shareholder's financiers would sell him out and send the stock down further, enabling the shorters to buy back at huge profits. 

Another common scenario was where hedge funds would see that some of the company’s loans had a market capitalisation trigger figure that enabled banks to appoint an administrator if the capitalisation fell below a stated level. The hedge funds would drive the stock down to that level. Sometimes the information the hedge funds used was clearly an inside tip. 

Once they discovered a weakness, the hedge funds would borrow scrip from index funds, superannuation funds or others and try to bring on a crisis by ruthless shorting. An essential part of the process was to flood the market with rumours – some Australian companies have reported up to 70 a day. Sometimes a journalist would write a really tough article on a company often inspired by the shorters' research. The stock would slump. Sometimes the inside information was right and other times it was wrong. It did not matter much. 

The early targets in Australia were companies like Centro, ABC Learning, Challenger and Allco. Each of these companies had flaws in their operation and the defenders of shorting would say that short selling merely hastened the crisis. On the other hand, it also prevented rescue attempts (Investors must fight back, February 27).

But globally it became apparent that the best shorting game was to go for banks, because if you could get a deposit run going on the bank the shorters' profits would be huge. Strangely, the first attempt at shorting a bank in Australia was a complete disaster. The shorters went for Bendigo Bank and shorted about 14 per cent of the capital. In that case the rumours were wrong. The bank was in good shape and a French bank bought in. The shorters had to cover and were routed (Bendigo shafts the shorters, March 12).

But overseas bank raids became a shorter’s picnic because of the huge sub-prime and other losses they faced. 

In Australia the shorters played the bank game with Macquarie Bank trying to engineer a run on the bank and bring about its destruction. Like Bendigo Bank, Macquarie had no real difficulties and the shorters were routed, helped by a rally in the market, but it showed graphically what could be done.

The hedge funds have only themselves to blame for the Australian and global action against them because they took what was a reasonable activity and tried to manipulate the market to destroy the banking system. Not one group undertook such an action, but it was the collective outcome.

The people who were big victims of the shorting action were the clients of those who loaned the stock. They remained long in stocks and saw their unscrupulous managers lend stock to shorters who destroyed the value. The ruthless superannuation funds mangers who undertook those actions should have been fired. Now they can't do it and their clients are the winners. 

The hedge funds are going to suffer big losses depending on how much time they are given by their supporters to cover. Many of the world banks loaned large sums to these funds and they will incur well deserved losses."


----------



## Timmy

dutchie said:


> In the news Kevin Rudd said that banning short selling will stop the manipulation of stocks.
> 
> Thank god for that, it will be heaven to deal in a market that is not being manipulated!!




LOL.

I wish I was a fly on the wall in the briefing Mr. Rudd got...

"OK Mr. Rudd.
Now, this is your arrrrse.
And this is your elbow.
Etc."


----------



## fordxbt

Timmy said:


> LOL.
> 
> I wish I was a fly on the wall in the briefing Mr. Rudd got...
> 
> "OK Mr. Rudd.
> Now, this is your arrrrse.
> And this is your elbow.
> Etc."




"so let me understand now..you can actually make money $$$ on a losing position? why the hell didnt we ban this already!?!"

my 5 cents, its not the shorters who entirely draw the market down its the vast majority running away with their tails between their legs & dumping their portfolios. this little brief fix will give those their will back to buy back into the market therefore creating this euforia that it was the short-sellers who created this downturn when infact it was the bears


----------



## cordelia

It's apparant that no one understands what sort selling actually is..even the journalists and more disturbingly.. the politicians who run this country...most people get a little bit of information and try to connect the dots....

Public focus of short selling, is totally confined to the concept of "selling a stock you don't own", labelling the seller as some sort of evil, devil worshipping criminal....without actually examining the different forms it can take, the processes involved and the outcomes.

It is true ....short selling as a broad genre ..can be loosely described as above...However, no one seems to really understand the difference between a short sale which arranges "the borrow" prior to the trade and one that doesn't....

I have said this over and over again.....read my previous posts because I am not repeating it..that's if you want to...


but....for all those longs who are so eager to declare short selling as the reason for the problems in the stock market..did it ever occur to you that short sellers provide support for your long positions by covering their short ones...Ar some point when a stock is falling traders who are short have to close out their positons..They now become buyers...Banning short selling in its entirety has effectively eliminated buyers whpo provide support

The market won't have a balanced equilibrium without covered short selling....

I think as a regular trader you aren't aware of the type of short selling that your broker offers...Does anyone know...


----------



## Wysiwyg

cordelia said:


> The market won't have a balanced equilibrium without covered short selling....




Hi there cordelia, why do prices drop rapidly?It is because the holders are selling along with the short sellers which compounds what would normally be holder profit taking.


----------



## Greg71

If shorters weren't covering, creating support, wouldn't the effect be support, just at a higher price?


----------



## chops_a_must

Wysiwyg said:


> Hi there cordelia, why do prices drop rapidly?It is because the holders are selling along with the short sellers which compounds what would normally be holder profit taking.



Not really.

Big shorters need that liquidity to buy back into, so it gives others a place to sell.

Without them you may get massive spreads, and may get an 87 type scenario where there are no bids in a worst case scenario.


----------



## wayneL

cordelia said:


> It's apparant that no one understands what sort selling actually is..even the journalists and more disturbingly.. the politicians who run this country...most people get a little bit of information and try to connect the dots....
> 
> Public focus of short selling, is totally confined to the concept of "selling a stock you don't own", labelling the seller as some sort of evil, devil worshipping criminal....without actually examining the different forms it can take, the processes involved and the outcomes.
> 
> It is true ....short selling as a broad genre ..can be loosely described as above...However, no one seems to really understand the difference between a short sale which arranges "the borrow" prior to the trade and one that doesn't....
> 
> I have said this over and over again.....read my previous posts because I am not repeating it..that's if you want to...
> 
> 
> but....for all those longs who are so eager to declare short selling as the reason for the problems in the stock market..did it ever occur to you that short sellers provide support for your long positions by covering their short ones...Ar some point when a stock is falling traders who are short have to close out their positons..They now become buyers...Banning short selling in its entirety has effectively eliminated buyers whpo provide support
> 
> The market won't have a balanced equilibrium without covered short selling....
> 
> I think as a regular trader you aren't aware of the type of short selling that your broker offers...Does anyone know...




It's useless cordelia, if they haven't got it by now, with all the discussion on this board, they never will. 

Save your energy for another battle mate.


----------



## cordelia

wayneL said:


> It's useless cordelia, if they haven't got it by now, with all the discussion on this board, they never will.
> 
> Save your energy for another battle mate.




Yes, I have to agree.....I didn't start out in search of a battle but I found one....


----------



## It's Snake Pliskin

I would also like to know:

*Should shorting be Banned in the oil market?*


----------



## chops_a_must

It's Snake Pliskin said:


> I would also like to know:
> 
> *Should shorting be Banned in the oil market?*




Nokia certainly didn't answer it.

Despite claiming evidence of banning shorting being such a great idea.


----------



## nioka

chops_a_must said:


> Nokia certainly didn't answer it.
> 
> Despite claiming evidence of banning shorting being such a great idea.




Thinking, thinking, thinking. All will be revealed in the fullness of time.


----------



## wayneL

nioka said:


> Thinking, thinking, thinking. All will be revealed in the fullness of time.



This is going to be interesting


----------



## cordelia

OMG.. WayneL i just noticed your avatar and name ..i didn't realise you were an evil short seller! Do you have any distinguishing features that might alert unsuspecting longs as to your true intentions? Perhaps a desire to eat children, assassinate the Queen, eat the livers of dead sheep....or God forbid ....vote liberal


----------



## Bushman

This thread is evidence that Dubya has found his new terrorists! Classic. A decoy and everyone laps it up. Goebbels had nothing on Paulson and his 'it is a big problem' lackey. 

Shorting is the headline folks.The main game is not shorting - bad debts are being socialised and the US taxpayer is picking up the bill. Come again? Then again it is the US consumer that was driving this little asset bubble, lapping up debt to pay for their MacMansions and assorted gizmos. Maybe it is right that they lose their tax cuts to pay for it. 

As an aside, an Italian minister was quoted today as saying that Alan Greenspan will go down as being behind only the chief 'Evil Doer' in harming the American people!


----------



## wayneL

cordelia said:


> OMG.. WayneL i just noticed your avatar and name ..i didn't realise you were an evil short seller! Do you have any distinguishing features that might alert unsuspecting longs as to your true intentions? Perhaps a desire to eat children, assassinate the Queen, eat the livers of dead sheep....or God forbid ....vote liberal



hahaha!

The only real way to tell is the increasing bank account as the market turns to shyte. :batman:

Gotta fly under the radar.


----------



## cordelia

Bushman said:


> This thread is evidence that Dubya has found his new terrorists! Classic. A decoy and everyone laps it up. Goebbels had nothing on Paulson and his 'it is a big problem' lackey.
> 
> Shorting is the headline folks.The main game is not shorting - bad debts are being socialised and the US taxpayer is picking up the bill. Come again? Then again it is the US consumer that was driving this little asset bubble, lapping up debt to pay for their MacMansions and assorted gizmos. Maybe it is right that they lose their tax cuts to pay for it.
> 
> As an aside, an Italian minister was quoted today as saying that Alan Greenspan will go down as being behind only the chief 'Evil Doer' in harming the American people!




yep your right ..shorting is the decoy....


----------



## cordelia

Bushman said:


> This thread is evidence that Dubya has found his new terrorists! Classic. A decoy and everyone laps it up. Goebbels had nothing on Paulson and his 'it is a big problem' lackey.
> 
> Shorting is the headline folks.The main game is not shorting - bad debts are being socialised and the US taxpayer is picking up the bill. Come again? Then again it is the US consumer that was driving this little asset bubble, lapping up debt to pay for their MacMansions and assorted gizmos. Maybe it is right that they lose their tax cuts to pay for it.
> 
> As an aside, an Italian minister was quoted today as saying that Alan Greenspan will go down as being behind only the chief 'Evil Doer' in harming the American people!




What or who is Dubya?

have fun everyone ..learn to love each other..its far more pleasant


----------



## It's Snake Pliskin

cordelia said:


> yep your right ..shorting is the decoy....




In Planet of the Apes they did to the astronaughts what they did to Jack Nicholson in One Flew over the Cukoos Nest. I hope the anti short selling Apes don't do that to the people who display a little intelligence.

Seriously though, if you look through history there are decoys everywhere.


----------



## wayneL

It's Snake Pliskin said:


> In Planet of the Apes they did to the astronaughts what they did to Jack Nicholson in One Flew over the Cukoos Nest. I hope the anti short selling Apes don't do that to the people who display a little intelligence.
> 
> *Seriously though, if you look through history there are decoys everywhere.*



Yes indeed.


----------



## cuttlefish

cordelia said:


> What or who is Dubya?




George W (i.e. 'Dubya')


----------



## James Austin

just seen the dow, *dn 370 pnts* overnight.

how did that happen, without shorters in the market?

perhaps its a fundamental issue after all!


----------



## Struzball

James Austin said:


> just seen the dow, *dn 370 pnts* overnight.
> 
> how did that happen, without shorters in the market?
> 
> perhaps its a fundamental issue after all!




Seems to not make a difference, just now means that nobody will be able to PROFIT from it!


----------



## wayneL

Struzball said:


> Seems to not make a difference, just now means that nobody will be able to PROFIT from it!




Ahem......!

Futures are still shortable.


----------



## noirua

Shorting is an unacceptable face of capitalism.


----------



## wayneL

noirua said:


> Shorting is an unacceptable face of capitalism.




Oh really?

Perhaps you can answer this question: Should the shorting of S&P 500 futures be banned. Is shorting the futures "an unacceptable face of capitalism"?


----------



## James Austin

*A step too far
Michael West *

Banning short selling means less liquidity therefore more volatility in share prices. It is reckless policy-on-the-run.

That said, if a brief moratorium on shorting can stabilise stock prices and restore some confidence, it may be a good thing. The problem is the regulators have gone too far by banning all shorting _ naked and covered that is, and in all stocks and sectors - and the present policy settings are unlikely to see out the month.

It is a killer for the ASX, as well as liquidity in general. In a normal market, short selling accounts for a third of volumes and right now the share would be closer to 50%. Despite the conspiracy theories, shorting is not just about hedge funds ravaging stock prices for their own greedy ends _ though that is a good part of it.

All the big brokers ''make a market'' in most of the big stocks, buying and selling themselves just for the sake of volume which can bring them corporate business. Further, they ''facilitate'' large portfolio transactions, shorting shares in order to achieve price outcomes for their clients.

Then there's arbitrage, long/short funds and brokers simply shorting to keep a price where they want it while they are trying to pull off a large ''crossing'' of shares in a company.

Yesterday's price action tells the story. ASX fell 5%. Macquarie rose another 5%, Centro and Babcock surged. ANZ and NAB rose 8% and 6% whereas CBA and Westpac rose 4% and 5%. Outside the major banks the good stocks edged higher or were flat while the dodgy stocks rallied hard.

In a normal market where there was real buying the opposite would have occurred. Most of the action was at the outset where vulnerable companies shot up in the panic of a ''short-covering'' rally. The rest of the day was spent wondering what would happen next. These are unchartered waters.

The ideal solution would have prevention rather than cure, or prevention before life support for that matter. All along the policy should have been to enforce disclosure of share lending data on a daily basis, perhaps banning ''naked'' shorting altogether.

It is a fair call that, had ASIC not stepped in and canned shorting, big offshore hedge funds may have turned their attention to Australia, and to Macquarie in particular which has already attracted the focus of foreign funds including famous Wall Street short-seller Jim Chanos. But US and UK regulators had only banned shorting in financial stocks, so why didn't we?

The Government appears to have capitulated to some vigorous lobbying over the weekend from Macquarie, which is ironically one of the biggest short-sellers in the market via its equities derivatives business. As it is an ''approved market maker'' in  warrants and so forth the provisions of the ban effectively allow the group to continue shorting but not be shorted itself. This is a policy feature which won't make its rival investment banks and brokers too happy.

In fact, most major market players will be demanding further clarification today, particularly whether listed funds and various hybrids are subject to the new measures and what the implications are for counterparties of the market makers.

For its part, a one month ban should help Macquarie as it continues to unwind its leverage, selling assets in its satellites and head stock to raise its capital buffers.. A failure would be damaging to the entire market given its sheer size and its reach into the economy via infrastructure assets and super funds so if the government can help avert that the ''moral hazard'' could be worth it.

Few debates have polarised opinion as has the brawl between the critics and the advocates of short-selling. There are worthwhile points to be scored on both sides but shorting, for the most part, is a benefit rather than a hindrance to the market.

Liquidity is just one aspect. Price discovery is another. The quicker a stock is restored to its right value the better. Shorting has been going on since the Dutch boom in the early 1600s and was banned by Napoleon 200 years later as a scourge on the market which thwarted his raising money for the war effort. It was banned for many years in the US in the 19th century.

The most often quoted evidence of the benefit of a market taking pain promptly on the chin is the Japanese experience. Its economy, stock market and banking system still bear the scars from the aftermath of the 1980s crash thanks to the Government's refusal to let its banks fail.

While the US market is in utter disarray and now subject to the biggest bail-out in history it should not be forgotten that one of its most compelling facets has been a willingness to allow booms and busts to take their natural course. The recoveries are rapid.

The fact is that stocks are usually shorted because they are too expensive and the selling restores their proper price. Although ''the shorts'' are lambasted in every cycle as conspirators and rumour-mongers they are mostly driven by fundamental analysis, the very fundamental analysis which went missing in the euphoria of a bull market and whipped stock prices to unsustainable highs.

What will happen in one month's time? 

mwest@fairfax.com.au


http://www.businessday.com.au/business/a-step-too-far-20080923-4lxz.html#


----------



## subi1

wayneL said:


> Oh really?
> 
> Perhaps you can answer this question: Should the shorting of S&P 500 futures be banned. Is shorting the futures "an unacceptable face of capitalism"?




Wayne L

I have been looking at the oil price this morning and noticed that it jumped to $130 overnight(at its highest)due to short sellers having to cover due to contracts rolling over.  I am having trouble working out how this shorting helps markets could you explain it to me.

Thanks


----------



## freddy2

subi1 said:


> Wayne L
> 
> I have been looking at the oil price this morning and noticed that it jumped to $130 overnight(at its highest)due to short sellers having to cover due to contracts rolling over.  I am having trouble working out how this shorting helps markets could you explain it to me.
> 
> Thanks




LOL. Shorters make stocks go down in a falling market and go up in a rising market. 

Maybe the politicians should ban going long in the oil market, I'm sure the they would get a lot of support from the public.


----------



## Trembling Hand

subi1 said:


> Wayne L
> 
> I have been looking at the oil price this morning and noticed that it jumped to $130 overnight(at its highest)due to short sellers having to cover due to contracts rolling over.  I am having trouble working out how this shorting helps markets could you explain it to me.
> 
> Thanks




Subi where did you get that from  Thats just not right.

Without shorts in the market we have no futures market. We have no price discovery, we have no easy way to price commodities, we have large supplies setting the prices. Have a look at BHP, RIO and the other big Iron player they just set the price and the mills have to take it. They are squeezing the hell out of our comrades to the north. But that is fine because everyone is long BHP including the government.

Would you like Exxon, Shell and BP to set your price for oil. Or would you like to have what is the best of few options educated and skilled speculaters and investers setting the price. Ones that will take the otherside of huge powerful companies.


----------



## wayneL

subi1 said:


> Wayne L
> 
> I have been looking at the oil price this morning and noticed that it jumped to $130 overnight(at its highest)due to short sellers having to cover due to contracts rolling over.  I am having trouble working out how this shorting helps markets could you explain it to me.
> 
> Thanks




Eh? Contracts rolling over has nothing to do with short sellers. Both shorts and longs have to roll over. That move was exclusive to the October contract and was all about guaranteeing delivery. Somebody was caught out with physical supply as only refiners and suppliers are involved with the Oct contract at expiry. This often happens with commodity futures contracts on the last day of trade on small volume.

If you look at the November contract, it is a different story. The vast bulk of traders have rolled over days ago.

Nothing to do with short selling in the normal course of business and in particular, absolutely no relation to the short selling of stocks.


----------



## subi1

Trembling Hand said:


> Subi where did you get that from  Thats just not right.
> 
> Without shorts in the market we have no futures market. We have no price discovery, we have no easy way to price commodities, we have large supplies setting the prices. Have a look at BHP, RIO and the other big Iron player they just set the price and the mills have to take it. They are squeezing the hell out of our comrades to the north. But that is fine because everyone is long BHP including the government.
> 
> Would you like Exxon, Shell and BP to set your price for oil. Or would you like to have what is the best of few options educated and skilled speculaters and investers setting the price. Ones that will take the otherside of huge powerful companies.




Fair enough but I just thought price control would be similar to the fruit & vege markets where the amount of supply & demand determines the price.

It appears to me as though the type of shorting that has been going on in a lot of markets is manipulative. In the end the only guy standing is the biggest because he has tricked everybody else to being on the wrong side of the trade.

Maybe actually the ban on short selling is an example of this. Everybody is short and then they change the rules. The same thing happened when they extended natural gas contracts for 2 months during the hurricane.


----------



## wayneL

wayneL said:


> Eh? Contracts rolling over has nothing to do with short sellers. Both shorts and longs have to roll over. That move was exclusive to the October contract and was all about guaranteeing delivery. Somebody was caught out with physical supply as only refiners and suppliers are involved with the Oct contract at expiry. This often happens with commodity futures contracts on the last day of trade on small volume.
> 
> If you look at the November contract, it is a different story. The vast bulk of traders have rolled over days ago.
> 
> Nothing to do with short selling in the normal course of business and in particular, absolutely no relation to the short selling of stocks.




Here is the oil strip to demonstrate what I'm talking about.


----------



## Trembling Hand

subi1 said:


> It appears to me as though the type of shorting that has been going on in a lot of markets is manipulative.




Could you provide a clear example of a perfectly good company that will not be impacted by the toxic stench coming from the US that is clogging up the world economy and bringing into question the bull market growth of 02 -07

AND has been manipulated??


----------



## noirua

wayneL said:


> Oh really?
> 
> Perhaps you can answer this question: Should the shorting of S&P 500 futures be banned. Is shorting the futures "an unacceptable face of capitalism"?




Hi wayneL, I've decided to use my inaugural rights and not answer this question.  Will answer later, if I remember.

Unfortunately, shorting of stocks is very difficult to control. An ideal situation, where a computer programme can stop shorting if it represents far more stock than is traded in an average week, is a long way off.

It is a matter of control. Some small companies in the States were driven out of business when more stock than existed for trading became shorted.
Now it seems that much bigger companies have found a large percentage of a stock shorted and it just became a financial game.

Until shorting is able to be tightly controlled it remains "an unacceptable face of capitalism".


----------



## wayneL

noirua said:


> Hi wayneL, I've decided to use my inaugural rights and not answer this question.  Will answer later, if I remember.
> 
> Unfortunately, shorting of stocks is very difficult to control. An ideal situation, where a computer programme can stop shorting if it represents far more stock than is traded in an average week, is a long way off.
> 
> It is a matter of control. Some small companies in the States were driven out of business when more stock than existed for trading became shorted.
> Now it seems that much bigger companies have found a large percentage of a stock shorted and it just became a financial game.
> 
> Until shorting is able to be tightly controlled it remains "an unacceptable face of capitalism".



Nice dodge, but I'm not letting you off after making such a ludicrous statement.

Is the shorting of S&P 500 futures unacceptable?

Furthermore, do you believe traders should be able to go long S&P 500 futures?

These are simple questions and deserving of an answer.


----------



## freddy2

noirua said:


> It is a matter of control. Some small companies in the States were driven out of business when more stock than existed for trading became shorted.




Name one profitable company where this occured. You do realise that the stock market is a secondary market and a stock price has no affect on a companies profits in almost all circumstances?


----------



## Bushman

You know 'Dubya' - as in the god of debt and tax cuts, the implementer of 'big things' for 'big problems'. 

The main issue is not the traders tool of shorting, it is disclosure around shorting that needs to be improved. At the moment it's not a fair ball game. Longs need to disclose substantial positions, shorts do not. Sets up the capital ambush. Short by all means but lets get the information out there. It is meant to be an 'efficient market' after all. 

Anyhow it is a one month ban so they can figure out some punitive measures for nasty rumor mongerers. Not the end of the world even though it will be one volatile month ahead of us. As some of you have pointed out, our markets have lost a shizen load of liqudity now that the shorters have received a red card. So a black October is more possible now than it was before. 

Then again if a Citibank had fallen, what then for the markets? 

Anyway back to the main game. How will Hank and Ben get Congress to sign off on the new breed of uber financial socialism that has been proposed? Ha ha. Should prove to be entertaining.


----------



## dutchie

Whoa

Looks like the market is going to go down today!!!??

No wonder - its because the banning of short selling has tilted the market.

Solution - ban naked long buying.

We can text Kevin that this will definately stop market manipulation!


----------



## noirua

freddy2 said:


> Name one profitable company where this occured. You do realise that the stock market is a secondary market and a stock price has no affect on a companies profits in almost all circumstances?




 If a companies shares are dramatically reduced in price by shorting of the stock.  Then it impacts the companies loan book and banks can call-in loans and this can mean the end of the company. Other companies seeing the fall in price of the company may not wish to trade, suspecting a hidden problem, where in fact one does not exist. In my view this is an unacceptable face of capitalism.

Halifax Bank of Scotland was saved by a takeover by Lloyds TSB after suffering severe shorting of their stock. They are a profitable company.


----------



## Trembling Hand

noirua said:


> Then it impacts the companies loan book and banks can call-in loans and this can mean the end of the company.




Yep that can happen for sure. But to what companies. CNP? ABC Learn? Lemmings?

What fundamentally sound company has that happened to?


----------



## Trembling Hand

See the US Bank index had the largest fall in HISTORY last night. 


WITHOUT short selling. :bonk::eek3::screwy::bad:


----------



## wayneL

Trembling Hand said:


> See the US Bank index had the largest fall in HISTORY last night.
> 
> 
> WITHOUT short selling. :bonk::eek3::screwy::bad:




Poetic!


----------



## nunthewiser

Dear wayne and TH , u guys seem like a pair of fairly switched on fellows ..... please can u help .. im at odds with myself who i can blame now for this suddern downturn , anyone left to blame ? surely we cant look at the facts now ? please help as im sure between us all we can come up with a viable reason for this new wave of selling that can be passed onto the masses .
yours sincerely
one perplexed nun


----------



## noirua

SEC has announced that 31 stocks will be added to the 799 on the NYSE, where there is a temporary ban on short selling.  An email has been sent to all companies asking them to send details, if they believe the criteria laid out includes them, if they think they should be added to the list.


----------



## freddy2

noirua said:


> If a companies shares are dramatically reduced in price by shorting of the stock.  Then it impacts the companies loan book and banks can call-in loans and this can mean the end of the company. Other companies seeing the fall in price of the company may not wish to trade, suspecting a hidden problem, where in fact one does not exist. In my view this is an unacceptable face of capitalism.
> 
> Halifax Bank of Scotland was saved by a takeover by Lloyds TSB after suffering severe shorting of their stock. They are a profitable company.




You didn't answer my question, HBOS was not driven out of business it was taken over. Name 1 company that has gone out of business (eg Lehman Brothers) due to shorting and not their own balance sheet. If a company takes out a loan that depends on stock price they have only themselves to blame when things go wrong (as they surely do). You seem to have cause and effect backwards, companies going out of business causes shorting, shorting doesn't cause companies to go out of business.

I think the "unacceptable face of capitalism" is that you have lost money and want ot blame anyone except for yourself. This not not suprising given it is human nature to take credit when things go well but not when they go bad.


----------



## mayk

There are some rumors that shorting on double listed companies is allowed by ASX. Any confirmations? 

Now punters can again say BHP is down because it is dual listed....


----------



## noirua

freddy2 said:


> You didn't answer my question, HBOS was not driven out of business it was taken over. Name 1 company that has gone out of business (eg Lehman Brothers) due to shorting and not their own balance sheet. If a company takes out a loan that depends on stock price they have only themselves to blame when things go wrong (as they surely do). You seem to have cause and effect backwards, companies going out of business causes shorting, shorting doesn't cause companies to go out of business.
> 
> I think the "unacceptable face of capitalism" is that you have lost money and want ot blame anyone except for yourself. This not not suprising given it is human nature to take credit when things go well but not when they go bad.




Hi, with all due respect, it is easy to ask questions, however, I can choose to answer in the way i decide to. If you don't like my answers or lack of them, then, so be it.  

On HBOS, the shares were driven down to 88 pence from around £10.00.  An announcement was made that they were in takeover talks with Lloyds, this saved the day. It was shorting of HBOS that caused the Bank of England to approach Lloyds.

As you mention my financial position, not really relevant to the shorting issue, you will see from my posts over the years that I always keep to 70% to 80% in cash or short term fixed interest.

All the very best in your investments and I hope all goes well for you in the future.  Good Luck - noi


----------



## freddy2

noirua said:


> Hi, with all due respect, it is easy to ask questions, however, I can choose to answer in the way i decide to. If you don't like my answers or lack of them, then, so be it.




It's even easier to make unsubstantiated claims like "shorters have forced companies out of business".

Like I said it is just human nature to blame the shorters and for politicians to take advatantage of this. Humans see X (shorting) followed by Y (company out of business) and assume X causes Y when in fact it is Z (risky behaviour/ over leveraging/dodgy accounting) that cause X and Y. Basically correlation and causation are confused.


----------



## Timmy

Trembling Hand said:


> See the US Bank index had the largest fall in HISTORY last night.
> 
> 
> WITHOUT short selling. :bonk::eek3::screwy::bad:




Nah - your screen must be upside down or something.


----------



## Wysiwyg

freddy2 said:


> Basically correlation and causation are confused.




If traders were making money short selling stock they would be pithed.The majority of people (still) believe company shares will be an appreciating asset to hold.


----------



## wayneL

freddy2 said:


> It's even easier to make unsubstantiated claims like "shorters have forced companies out of business".
> 
> Like I said it is just human nature to blame the shorters and for politicians to take advatantage of this. Humans see X (shorting) followed by Y (company out of business) and assume X causes Y when in fact it is Z (risky behaviour/ over leveraging/dodgy accounting) that cause X and Y. Basically correlation and causation are confused.



Exactly freddy!

If one looks at Uk financials with better balance sheets, HSBC for example, shorting is not an issue.

Compare to Bradford and Bingly, the next UK bank to fall over.


----------



## Wysiwyg

This article shows the causation factor ... 



> The stock lending loophole changed all that. Hedge funds found they could borrow stock, not just in the approved companies, sell it and not have to reveal a thing. *Even better, they could borrow more than the 10 per cent **limit and create a run*. *And the beauty of the scam was that other investors, seeing massive selling, jumped on board thinking someone must know something they don't.*




http://business.smh.com.au/business...tale-of-shortselling-super-20080328-227c.html

So there we go, the cause and effect. Worse is super funds lending our stock to short.


----------



## Aussiejeff

Wysiwyg said:


> This article shows the causation factor ...
> 
> 
> 
> http://business.smh.com.au/business...tale-of-shortselling-super-20080328-227c.html
> 
> So there we go, the cause and effect. Worse is super funds lending our stock to short.





After considerable deep thought *coff* I blame the immediacy of ..... THE INTERNET!!

BAN IT!! [size=+1]BAN IT!!! [/size][size=+2]BAN IT!!![/size] :bounce:


----------



## Timmy

Wysiwyg said:


> This article shows the causation factor ...





So, is the problem short selling ... or is the problem that a loophole in the law was exploited?  Unfortunately, that is what people do, they exploit loopholes when they can.  

The loophole ... well, it was glaringly obvious ... a subsidiary (or licensee, not sure what the correct term would be) of Opes was advertising openly on its website how the loophople worked.  I was considering using the service myself but couldn't justify it, CFDs being much easier and cheaper for me as a retail trader.  

So maybe the problem is not short selling per se, but a failure to close a loophole by regulators.

On anothr point, the quote you pulled from the article ... maybe you could include another quote from it:

“Short selling ...It's a legitimate trading technique that adds liquidity to a market”


----------



## Bushman

Wysiwyg said:


> So there we go, the cause and effect. Worse is super funds lending our stock to short.




Now that would make sense to legislate against. If super is a long-term investment, why are managers allowed to beef up annual returns by lending out stock to hedgies and the like?  Makes no sense to me.

Most super funds would have had an allocation to the Big 4 banks that have been a big target for the shorters. It has bhit all of us who rely on external managers.


----------



## saltyjones

every shorter for the last 6 months should be rounded up & sent to the julag. mr. putin is waiting.........


----------



## freddy2

Bushman said:


> Now that would make sense to legislate against. If super is a long-term investment, why are managers allowed to beef up annual returns by lending out stock to hedgies and the like?  Makes no sense to me.




Stock lending makes perfect sense for long-term holdings. Who cares about a little bit of price fluctuation, even if negative, in the short term when the price of a stock in 10+ years is determined by the underlying business (ie earnings). In fact if you want to buy more shares the lower prices caused by the shorters will be good for you.


----------



## chops_a_must

nioka said:


> Thinking, thinking, thinking. All will be revealed in the fullness of time.




*Twiddles thumbs*

*Birds chirp*


----------



## Wysiwyg

Timmy said:


> So maybe the problem is not short selling per se, but a failure to close a loophole by regulators.
> 
> “Short selling ...It's a legitimate trading technique that adds liquidity to a market”




Yes, yes point taken.

As an indices short seller I have to confess .... when first venturing into short selling I sold a contract with initial stop loss before going to watch a ODI cricket match this year at the Gabba and came home to see $12500 sitting waiting to be locked in after the Index took a rapid dive.Being a small player I had never seen such instant wealth.

Needless to say I have crashed and burned often too.Cuts both ways.


----------



## Bushman

freddy2 said:


> Stock lending makes perfect sense for long-term holdings. Who cares about a little bit of price fluctuation, even if negative, in the short term when the price of a stock in 10+ years is determined by the underlying business (ie earnings). In fact if you want to buy more shares the lower prices caused by the shorters will be good for you.




Why do it though? It's window dressing for fund manager performance. If they are long-term holders of stock, then go long.


----------



## chops_a_must

Bushman said:


> Why do it though? It's window dressing for fund manager performance. If they are long-term holders of stock, then go long.




What difference does it make?

They'll still write calls, which no-one would have a problem with, yet in reality is a short or at least, negative position.

Realised gains for super funds doesn't really come from stock price appreciation does it?


----------



## freddy2

Bushman said:


> Why do it though? It's window dressing for fund manager performance. If they are long-term holders of stock, then go long.




Why wouldn't you want to earn an extra whatever (say 1%) if it doesn't make any difference in the long term? The super funds are still long when lending out the stock, the shorters have to give the stock back at some point in time.


----------



## franktbird

Aussiejeff said:


> After considerable deep thought *coff* I blame the immediacy of ..... THE INTERNET!!
> 
> BAN IT!! [size=+1]BAN IT!!! [/size][size=+2]BAN IT!!![/size] :bounce:




HEAR HEAR.
Better still America caused this lets ban them.
Everyone start pulling your funds out of US, recall all loans and invest them in something else.
That'd knock them down a peg or two.
The only problem I can see here is that they'd want to start a war with us.


----------



## Timmy

freddy2 said:


> Why wouldn't you want to earn an extra whatever (say 1%) if it doesn't make any difference in the long term? The super funds are still long when lending out the stock, the shorters have to give the stock back at some point in time.




And from time-to-time you could mention to your fund manager buddies at the rugby that you were thinking of recalling your stock in, say, "XYZ" (or whatever) and if they thought the same thing maybe a bit of a short-covering rally could be engineered ... just hypothetically, of course.


----------



## prawn_86

franktbird said:


> Everyone start pulling your funds out of US, recall all loans and invest them in something else.
> That'd knock them down a peg or two.
> The only problem I can see here is that they'd want to start a war with us.




China is slowly buying them up from the inside, and when the US does want a war it will be one hell of a fight 

I'll go for China at this stage but reserve the right to change teams half way through


----------



## Julia

chops_a_must said:


> Realised gains for super funds doesn't really come from stock price appreciation does it?



No?   Where does it come from?


----------



## cuttlefish

chops_a_must said:


> What difference does it make?
> 
> They'll still write calls, which no-one would have a problem with, yet in reality is a short or at least, negative position.




The difference that it makes is counterparty risk.  What level of risk management is applied to the risk that the stock cannot be returned because the counterparty that borrowed it goes broke.  The reality is that stock lending is a title transfer in exchange for a 'promise' (counterparty risk) to return said stock.  The lender has no title any more over the stock that has been lent.   

Written calls do not have counterparty risk except for the call premium.  If the calls are assigned then the exercise is transacted via the asx and thus settlement is guaranteed by the ASX and the National Guarantee Fund is capitalised to compensate for such situations.

This is not the case for stock lending as I understand it as the lending happens outside the exchange (and the term 'lending' is a complete misnomer).

So the question is - do the super companies factor in this risk and does the stock lending fee adequately cover and justify the risk being taken on.


----------



## franktbird

prawn_86 said:


> I'll go for China at this stage but reserve the right to change teams half way through




LOL yeah me too.

What happens when they allow shorting again?
Will we be shorted out of existence?


----------



## finnsk

I thought with this ban on short selling that share was only suppose to go up, obviously not every body has been reading about the new rules


----------



## subi1

finnsk said:


> I thought with this ban on short selling that share was only suppose to go up, obviously not every body has been reading about the new rules




I think it was the shorters who were saying that shares would only go up  and there would then be a big crash because prices would go too high.

Maybe this is how a real market works?


----------



## Bushman

cuttlefish said:


> So the question is - do the super companies factor in this risk and does the stock lending fee adequately cover and justify the risk being taken on.




Exactly what I was thinking about today. Why is X% a reasonable risk adjusted fee? There seems to have been no thought given to lending out their clients stock by the fundies. The equities market is 'returning to risk fundamentals'. Why not those lending stock out to short sellers?  

If I was retiring in the the next few years then 1% would obviously not cut it given my capital return has been smoked and my investment horizon does not give me time to recover. Total return certainly matters when you need to liquidate your position.


----------



## captain black

Just came across this on the ABC news website:

http://www.abc.net.au/news/stories/2008/09/23/2372329.htm?section=justin



> Government drafts short-selling legislation Posted Tue Sep 23, 2008 5:00pm AEST
> The Federal Government has moved to make the practice of covered short-selling of stocks an offence unless it is reported.
> The Australian Securities and Investments Commission (ASIC) has temporarily banned most forms of short-selling in which investors trade in such a way to profit from a share price decline.



This bit is interesting:




> Corporate Law Minister Nick Sherry says the Government is preparing to lift the ban with the proposed legislation.



The sooner the better!


----------



## noirua

UK has brought in new rules, from today, that will require investors to make a declaration on shorting shares in financial firms.


----------



## chops_a_must

cuttlefish said:


> The difference that it makes is counterparty risk.  What level of risk management is applied to the risk that the stock cannot be returned because the counterparty that borrowed it goes broke.  The reality is that stock lending is a title transfer in exchange for a 'promise' (counterparty risk) to return said stock.  The lender has no title any more over the stock that has been lent.



Hey?

If that is the case, how do firms recall lent stock, which they do?


----------



## Trembling Hand

You wanna fix the counter party risk in the market.

Here's one 100 times worse than shorts. Retail broker account being able to trade on T3. There are actual threads on this forum and others of FOOLS daytrading without ANY money!!! 

But thats ok because they are longs 

Whats worst is if you have three days to come up with the money what will happen in a real crash. I will guarantee that some idiots will just empty their settling accounts and run in such a case.

But thats ok they are longs

But shorts that are real time mark to market...... Still no good!!


----------



## wayneL

wayneL said:


> Here is the oil strip to demonstrate what I'm talking about.




Here is a lesson demonstrating the idiocracy of the financial press.

Yesterday they were reporting that oil had shot up $25 or whatever... biggest one day rise and so on. Yes, the October contract did that, but had nothing to do with the price of oil.

Now that the Oct contract is dead, November is spot, and is trading at this very moment at $107.30

So did oil crash back down from yesterday's reported price. Not at all! It is down a couple of bucks, but the October closing price was illusory.

IT DID NOT EXIST in real terms.

The point? Be careful about believing what you read in the financial pages. They are journalists posing as experts on things they know very little about.

Extrapolation of this principle to the topicof short selling is prudent.


----------



## cordelia

i am a nervous long without the safety net of short sellers...I have no intention of justifying that statement...but that's where it's at...those who understand do.....those who don't need to get educated...


----------



## cuttlefish

chops_a_must said:


> Hey?
> 
> If that is the case, how do firms recall lent stock, which they do?




The 'borrower' (misleading use of the world) has a legal obligation to 'return' the stock (also misleading use of the term) however the 'lender' (misleading use of the term) has no real title over the stock that was lent during the time that is is in possession of the borrower.   Thus the lender is simply a creditor of the borrower as per the terms of the lending contract.   

Thus the lender exchanges secure title to the stock the it has lent for counterparty risk.   This is why I dislike the use of the terminology 'lend' and 'return' - its simply not what is occuring in reality.  

If you borrow somebody's car you can't sell it because you have no title over it.  But with borrowed stock it can be sold - that is because the borrower has title over it.  Only one person can have title over a stock.  (just ask some ex Opes Prime clients who will have been well educated on this fact - they 'lent' their stock - it wasn't 'returned' because the 'borrower' went bust - instead the real owner - ANZ bank - got to get it.

The same can happen (according to my understanding) to a super company that lends stocks to one of these CFD providers that then use it to allow retail investors to play the shorting game. If the CFD provider goes bust the institution is now just another creditor.




> But shorts that are real time mark to market......




Now TH makes a good point - which is that the borrower has to lodge funds mark to market to cover the differential between the price at borrow vs the current price.  This lodgement does mitigate the risk to some extent but its not fool proof.  I'm not sure whether there is consistency in the stock lending contracts either as they are not done via standard stock exchange settlement procedures - thus I'm assuming they can vary in terms depending on the agreements between the parties.  I know there's something called an AMSLA put out by the Australian securities lending association, but I'm not sure how detailed or consistent it is and how much it is varied for each individual agreement.



> Here's one 100 times worse than shorts. Retail broker account being able to trade on T3. There are actual threads on this forum and others of FOOLS daytrading without ANY money!!!




I completely agree and I think its another risk that isn't being properly mitigated for by the brokers.


----------



## It's Snake Pliskin

From the Sydney morning herald:
http://business.smh.com.au/business/a-step-too-far-20080923-4lxz.html



> _Banning short selling means less liquidity therefore more volatility in share prices. It is reckless policy-on-the-run._






> _There are worthwhile points to be scored on both sides but shorting, for the most part, is a benefit rather than a hindrance to the market._






> It is a killer for the ASX, as well as liquidity in general. In a normal market, short selling accounts for a third of volumes and right now the share would be closer to 50%. Despite the conspiracy theories, shorting is not just about hedge funds ravaging stock prices for their own greedy ends _ though that is a good part of it.




There are some good points to the contrary too.


----------



## cuttlefish

Where did they get the statistic that short selling accounts for a third of volume (and currently 50%)?!  - its sounds like complete BS to me - short selling wouldn't count for anywhere near this level of volume would it?


----------



## wayneL

cuttlefish said:


> Where did they get the statistic that short selling accounts for a third of volume (and currently 50%)?!  - its sounds like complete BS to me - short selling wouldn't count for anywhere near this level of volume would it?



That's a surprise to me too, would like to see accurate figures. I would have been surprised at anything over 10% TBH.

Not comparing stock to futures but in the futures, short selling is precisely 50% fwiw (as a clue to outstanding answers).


----------



## cuttlefish

Well its either another ill informed journalist or its an interesting statistic.  I guess for intraday positions in the larger liquid stocks it might be possible but it seems highly unlikely.  I would love to know where the figure came from.


----------



## Trembling Hand

cuttlefish said:


> Well its either another ill informed journalist or its an interesting statistic.  I guess for intraday positions in the larger liquid stocks it might be possible but it seems highly unlikely.  I would love to know where the figure came from.




We will have all the answers at the end of the week. We can compare the volume from two weeks ago to this week and see what is missing. That will be the shorts.

All will be revealed.

Please for F sake don't anyone compare last weeks Futs rollover to this weeks and say that's short volume or I am going to get Extremely F'en grumpy.


----------



## mazzatelli1000

Trembling Hand said:


> We will have all the answers at the end of the week. We can compare the volume from two weeks ago to this week and see what is missing. That will be the shorts.
> 
> All will be revealed.
> 
> Please for F sake don't anyone compare last weeks Futs rollover to this weeks and say that's short volume or I am going to get Extremely F'en grumpy.




Nah that triple witching stuff is all bollocks. No such thing as witches


----------



## Trembling Hand

mazzatelli1000 said:


> Nah that triple witching stuff is all bollocks. No such thing as witches




Don't give a toss about three witches but do ya wanna put some money on the fact that Wed, Especially Tuesday and Fridays jump in volume was Sep SPI Futs delivery/Rollover/Arb unwind??

Of course these could be just another HUGE coincidence that the dates of these spikes are, Thu 21st Jun 07, Thu 20 sep 07, Thu 20th Dec 07, Thu Mar 20th 08, Thu 19th Jun 08 & Thu 18th Sep 08. The same day as Futs expiry


----------



## mazzatelli1000

Trembling Hand said:


> Don't give a toss about three witches but do ya wanna put some money on the fact that Wed, Especially Tuesday and Fridays jump in volume was Sep SPI Futs delivery/Rollover/Arb unwind??
> 
> Of course these could be just another HUGE coincidence that the dates of these spikes are, Thu 21st Jun 07, Thu 20 sep 07, Thu 20th Dec 07, Thu Mar 20th 08, Thu 19th Jun 08 & Thu 18th Sep 08. The same day as Futs expiry




Haha - bit of tongue in cheek on my behalf TH


----------



## Trembling Hand

mazzatelli1000 said:


> Haha - bit of tongue in cheek on my behalf TH




I'm losing my mind.... and in the process my sense of humour :freak3:


----------



## Kremmen

Trembling Hand said:


> Here's one 100 times worse than shorts. Retail broker account being able to trade on T3. There are actual threads on this forum and others of FOOLS daytrading without ANY money!!!
> 
> But thats ok because they are longs




No, it's okay because it's irrelevant to overall market stability. Sure, any of us could do that, but our effect on the market is negligible. What matters to the market stability is what big fund managers or very large numbers of smaller investors do. Large numbers of investors don't trade with no money, but large numbers of investors turn to shorting in a plunging market.


----------



## Kremmen

freddy2 said:


> If a company takes out a loan that depends on stock price they have only themselves to blame when things go wrong (as they surely do).




That would be fair enough if the company directors who made the decision were the only ones to suffer. Given the ramifications for shareholders and the wider economy of such collapses, it's not that simple. Having a bank collapse, and then other banks moving in to take over all their work, is astronomically inefficient and a huge waste of productivity for the society. It benefits nobody except a few greedy stock traders who are, themselves, doing something intrinsically non-productive.

Most of the posts here appear to be basically founded in greed. A market which rockets up and down way out of proportion to any sensible valuation of the stocks is great for stock traders but not much good for anyone else in society. The amazing part is the posts about how bad it is the government "changing the rules of the game". It's not a game and it's not there for the benefit of ASF readers.


----------



## prawn_86

Kremmen said:


> It's not a game and it's not there for the benefit of ASF readers.




What benefit is it there for then?


----------



## nioka

Kremmen said:


> Most of the posts here appear to be basically founded in greed. A market which rockets up and down way out of proportion to any sensible valuation of the stocks is great for stock traders but not much good for anyone else in society. The amazing part is the posts about how bad it is the government "changing the rules of the game". It's not a game and it's not there for the benefit of ASF readers.




Agreed. However if you make statements like that on this thread you run the risk of upsetting about 60% of contributors because the truth of the statement can not be understood  or accepted by them.


----------



## cuttlefish

Kremmen said:


> A market which rockets up and down way out of proportion to any sensible valuation of the stocks is great for stock traders but not much good for anyone else in society.




The point that a lot of the supporters of short selling on here are making is that the price discovery provided by shorting helps to temper volatility, and that the hedging products provided by options and futures market makers also help to reduce volatility by allowing the larger players (funds etc.) to manage their risk via these products rather than having to constantly adjust the size of their holdings. 




> The amazing part is the posts about how bad it is the government "changing the rules of the game". It's not a game and it's not there for the benefit of ASF readers.




I'm sure the many private investors, funds and market makers that had legal open short positions to the tune of millions of dollars would agree that its not a game and hence changing the rules dramatically from one day to the next without warning is highly irresponsible.  Many of those short positions would have been created as a result of legitimate risk management activities - including risk management by super funds etc. in using hedging products like put options or SPI futures etc. to cover downside risk on portfolios.

I haven't got a strong opinion one way or another as to whether short selling is a good thing or a bad thing  for the markets (I think the markets can live without it however my biggest issue with it is regulation and transparency) but I am at least capable of understanding the rational points being made by the short selling advocates though.


----------



## Trembling Hand

Kremmen said:


> It benefits nobody except a few greedy stock traders who are, themselves, doing something intrinsically non-productive.




You may not like it pointed out but your "investing" is no different to my 30 second trades.

Just because your trades last month/years doesn't mean you are doing anything more productive than stripping capital growth and the odd div from some other poor sucker. We are playing the same zero sum game. One of us realizes it the other is in denial. IMHO


----------



## Kremmen

nioka said:


> Agreed. However if you make statements like that on this thread you run the risk of upsetting about 60% of contributors because the truth of the statement can not be understood  or accepted by them.




Possibly, but I don't think it's that hard to see the other side. I myself treat lots of things as games, but I like to stay aware that that's not everyone's view. If the rules change, then I try to think of it as being a positive that I used the system to my advantage earlier rather than complain that it's not going to last forever to suit me.


----------



## It's Snake Pliskin

*???*?


> Most of the posts here appear to be basically founded in greed.



Based on what criteria?


> A market which rockets up and down way out of proportion to any sensible valuation of the stocks is great for stock traders but not much good for anyone else in society.



Perhaps if some companies considered their actions on society the market may not see companies go down. But who pushes them up well over what is considered overpriced? Ah, those ethical guys and gals right? The ones considering society. The one's who aren't greedy right? 

Total hypocrisy of the charlatans.



> The amazing part is the posts about how bad it is the government "changing the rules of the game". It's not a game and it's not there for the benefit of ASF readers.



What is the game? Are you confusing game with business?

*Nioka,*


> Agreed. However if you make statements like that on this thread you run the risk of upsetting about 60% of contributors because the truth of the statement can not be understood or accepted by them.




Do you have anything of substance to add? 

Why don't you answer the oil question? Enough here are interested in the ethical answers of the ethical?


----------



## Kremmen

cuttlefish said:


> I'm sure the many private investors, funds and market makers that had legal open short positions to the tune of millions of dollars would agree that its not a game and hence changing the rules dramatically from one day to the next without warning is highly irresponsible.




I quite agree that for those actively in a position at the time, the ban without warning is irresponsible. I was meaning my comments about the general topic of shorting.


----------



## It's Snake Pliskin

Kremmen said:


> I myself treat lots of things as games, but I like to stay aware




How do you stay aware?

What do you treat as games?


----------



## Kremmen

Trembling Hand said:


> You may not like it pointed out but your "investing" is no different to my 30 second trades.




I'm quite aware of that. We are indeed playing the same zero sum game. (Except when some of us actually invest in the company directly and give it capital to work with, but I don't do that often.) I'm just not complaining that someone's taken part of the game away. If someone takes part of my game away, I'll look for other options (so to speak).


----------



## prawn_86

Kremmen said:


> I'm quite aware of that. We are indeed playing the same zero sum game. (Except when some of us actually invest in the company directly and give it capital to work with, but I don't do that often.) I'm just not complaining that someone's taken part of the game away. If someone takes part of my game away, I'll look for other options (so to speak).




So you have never complained about anything before?

As TH says, i would like to see them ban shorts in oil and see the uproar then...


----------



## IFocus

Kremmen said:


> Most of the posts here appear to be basically founded in greed.




Nope mostly ignorance of how a market functions and history of markets generally IMHO  




> A market which rockets up and down way out of proportion to any sensible valuation of the stocks is great for stock traders but not much good for anyone else in society.




Nope depends on your strategy,  method and time frame experienced traders trading EOD prefer to manage their risk, markets banging around are not good for risk management.





> The amazing part is the posts about how bad it is the government "changing the rules of the game". It's not a game and it's not there for the benefit of ASF readers.




Again I think you miss understand changing the rules changes risk to a point you cannot measure it. Trading is understanding risk IMHO


----------



## Kremmen

It's Snake Pliskin said:


> How do you stay aware?
> 
> What do you treat as games?




I just mean that it's worth noting that we don't run or regulate the markets, the governments do. If they don't like what's happening, they'll intervene. This shouldn't be unexpected. It is, if you like, part of the game.

Another example of games? Round-the-world air fares. As part of one, I flew back and forth about a dozen times between two nearby cities in order to rack up frequent flyer points. (If distance A-B = 80 miles and min. credit per sector = 500 miles, then 10 trips A-B = 800 miles used out of allowable total and 5000 miles credited.) By the next time I booked such a fare, they'd changed the rules to stop that.


----------



## mazzatelli1000

Kremmen said:


> Most of the posts here appear to be basically founded in greed. A market which rockets up and down way out of proportion to any sensible valuation of the stocks is great for stock traders but not much good for anyone else in society.




Depends on the trader and their strategy
There are traders out there that prefer the underlying not to move around alot. 
And the talk of greed - we are all operating a trading business. Im sure you would take whatever profits came your way.


----------



## chops_a_must

Kremmen said:


> Most of the posts here appear to be basically founded in greed.



I haven't traded in a while, so how are my posts based on greed?  Nothing that has been done has affected my financial position.



Kremmen said:


> A market which rockets up and down way out of proportion to any sensible valuation of the stocks is great for stock traders but not much good for anyone else in society.



Yet the people who support banning of shorts somehow aren't greedy if valuations start going through the roof, like they did, rather than going through the floor?


----------



## It's Snake Pliskin

http://business.theage.com.au/business/fbi-probes-finance-giants-for-fraud-20080924-4n0f.html

Perhaps the FBI is not bearish on shorters.


----------



## nioka

It's Snake Pliskin said:


> *???*?
> 
> *Nioka,*
> Why don't you answer the oil question? Enough here are interested in the ethical answers of the ethical?




 Still thinking, thinking, thinking.  ( got to keep you guessing a little longer, a moron doesn't have time to have an immediate answer to everything. Got to think of maintaining the image and I'm very busy trying to digest the other rubbish thrown at me. Then there is the fishing and the garden taking first place. Ah, it's a busy world.)


----------



## Kremmen

mazzatelli1000 said:


> And the talk of greed - we are all operating a trading business. Im sure you would take whatever profits came your way.




Definitely. I've even played Centro roulette, mostly getting their immediate future direction right. The stock market, however, is not a computer game with no ramifications in the real world. What I mean by greed is those who say shorting should continue because it's always been part of "the game" and don't care what happens to the companies. The collapse of parts of our financial markets matters to everyone and I believe it's very blinkered to expect governments to sit back and watch it happen. I'm surprised they didn't intervene sooner.... And it would have been better if they had intervened in a way which showed that they have some well-thought-out plan of action.


----------



## prawn_86

One could argue that the entire fault lies with govs. If ASIC and the ACCC actually had the manpower and legal power to enforce rules, then there would not have been the dodgy practices which caused the shorters to move in in the first place.

As others have said, try shorting a fundamentally sound company and see how far you get...


----------



## shares

You cannot blame short sellers for the current market conditions. The Aussie market is going down because of the plethora of real, bad financial news affecting global markets.

Yes, short selling does apply some downward pressure to the markets, but so what? The sharemarket does not exclusively go up. As soon as bad news hits the markets again, we're going to go down whether short selling is allowed or outlawed. If good news were to be released, then short sellers will be making massive losses on rebounding stocks and everyone will be happy again


----------



## wayneL

nioka said:


> Still thinking, thinking, thinking.  ( got to keep you guessing a little longer, a moron doesn't have time to have an immediate answer to everything. Got to think of maintaining the image and I'm very busy trying to digest the other rubbish thrown at me. Then there is the fishing and the garden taking first place. Ah, it's a busy world.)




While you're thinking, you can think about whether S&P500 0r SPI futures should be allowed to be shorted.

So far no ban supporters have been willing to answer that one either.


----------



## noirua

wayneL said:


> Oh really?
> 
> Perhaps you can answer this question: Should the shorting of S&P 500 futures be banned. Is shorting the futures "an unacceptable face of capitalism"?




Shorting S&P futures is really gambling and is far removed from investing. It is unacceptable in an investment arena.


----------



## wayneL

noirua said:


> Shorting S&P futures is really gambling and is far removed from investing. It is unacceptable in an investment arena.




OK, next question. Do you think buying sp futures is really gambling and is far removed from investing and unacceptable in an investment arena?


----------



## mazzatelli1000

noirua said:


> Shorting S&P futures is really gambling and is far removed from investing. It is unacceptable in an investment arena.




Following that interpretation, investing is also a gamble whether the share price will go up. Your just gambling with more time on your side  *rolls eyes*


----------



## skyQuake

noirua said:


> Shorting S&P futures is really gambling and is far removed from investing. It is unacceptable in an investment arena.




How about when u long the future contract?


----------



## nioka

wayneL said:


> OK, next question. Do you think buying sp futures is really gambling and is far removed from investing and unacceptable in an investment arena?




Maybe it is a business to be conducted on the TAB or at Jupiters on the Coast!!!!!!!! (Don't reply asking why or I'll have to start thinking, thinking, thinking.)


----------



## Trembling Hand

nioka said:


> Maybe it is a business to be conducted on the TAB or at Jupiters on the Coast!!!!!!!!




LOL it is!! its called a futures exchange and its the same as a stock exchange except the punters in the stock exchange think they are "sophisticated investors". :sheep:


----------



## wayneL

nioka said:


> Maybe it is a business to be conducted on the TAB or at Jupiters on the Coast!!!!!!!! (Don't reply asking why or I'll have to start thinking, thinking, thinking.)



OK so let me get this straight:

Buying a basket of 500 shares as represented by the sp500 is legitimate investing, to be conducted by responsible, suited and respectable businessmen and women, in a city building designed for the purpose.

Entering into a contact to buy the same basket of shares (but cash settled) and therefore financially the equivalent risks and rewards (but with far less brokerage costs), is gambling that should be conducted by spivs and wallies in a casino.

Is this what you are saying?


----------



## nioka

Trembling Hand said:


> punters in the stock exchange think they are "sophisticated investors". :




 I believe there is a definition of a sophisticated investor. To qualify you have to have made a taxable profit from investing in shares of a minimum of $250,000 for the past 2 years. I guess there are a number of exsophisticated investors today. Companies dealing with sophisticated investors don't have to make the same disclosures to them as they are obliged to do for the other investors.

Wayne,  Actually I said maybe so I leave it to others to start thinking about 'Why not". Why is it up to me to have all the answers.


----------



## wayneL

nioka said:


> Wayne,  Actually I said maybe so I leave it to others to start thinking about 'Why not". Why is it up to me to have all the answers.




Strong views require some justification, otherwise it looks like those views are based on ignorance.

Still waiting for answers from others too, BTW.


----------



## skyQuake

Classify it as gambling then, that's fine with me! No more capital gains tax or pesky accounting rules.


----------



## Naked shorts

skyQuake said:


> Classify it as gambling then, that's fine with me! No more capital gains tax or pesky accounting rules.




Hahahaha! :

@ Kremmen
Ever heard the speech "Greed is Good"?

It may be a pitty that greedy traders are doing something unproductive, but don't hate the player, hate the game. Not all companies need to go public you know...


----------



## nioka

skyQuake said:


> Classify it as gambling then, that's fine with me! No more capital gains tax or pesky accounting rules.




 That is the best suggestion to come from this topic so far.

OOps. A player won't be able to write off losses. Not such a good idea after all.


----------



## It's Snake Pliskin

nioka said:


> Still thinking, thinking, thinking.  ( got to keep you guessing a little longer, a moron doesn't have time to have an immediate answer to everything. Got to think of maintaining the image and I'm very busy trying to digest the other rubbish thrown at me. Then there is the fishing and the garden taking first place. Ah, it's a busy world.)




Nioka,

It is quite clear you won't answer any questions which is your choice. I don't think you are a moron, but according to the quality of your latest thread just a stirer. 

So long.


----------



## chops_a_must

nioka said:


> Still thinking, thinking, thinking.  ( got to keep you guessing a little longer, a moron doesn't have time to have an immediate answer to everything. Got to think of maintaining the image and I'm very busy trying to digest the other rubbish thrown at me. Then there is the fishing and the garden taking first place. Ah, it's a busy world.)



Right...

So because you can't answer a legitimate question because of an ideology, you deflect answering said question by claiming to be a stirrer.

I don't buy it.


----------



## nioka

chops_a_must said:


> I don't buy it.




 And I'm not selling it. Even if I was you couldn't afford it.


----------



## chops_a_must

nioka said:


> And I'm not selling it. Even if I was you couldn't afford it.



Lol.

Maybe if you increased the margin (like they tried to do with oil) to about a gazillion dollars.

The reason you wont answer the question is because you can't. Pretty simple really.


----------



## nioka

chops_a_must said:


> Lol.
> 
> Maybe if you increased the margin (like they tried to do with oil) to about a gazillion dollars.
> 
> The reason you wont answer the question is because you can't. Pretty simple really.




 This has gone on so long and with my old age dementia I can't even remember the Question. By now you don't deserve an answer anyway.

End of story.


----------



## IFocus

nioka said:


> This has gone on so long and with my old age dementia I can't even remember the Question. By now you don't deserve an answer anyway.
> 
> End of story.




Still Nioka good to see there is still life in the Old Dog


----------



## Calliope

Noika, I have a good news story for your tomentors.

In the Brisbane paper today they had a list of the 10 top Queenslanders in the 2008 BRW Young Rich List. And guess what;

Four of them were hedge fund traders.


----------



## fordxbt

Calliope said:


> Noika, I have a good news story for your tomentors.
> 
> In the Brisbane paper today they had a list of the 10 top Queenslanders in the 2008 BRW Young Rich List. And guess what;
> 
> Four of them were hedge fund traders.




wasnt one also a motor-cross rider !?
join krusty demons, break my body for $1mil per show, sure as hell alot better than the current market predicaments!


----------



## nomore4s

What about the guy who brought a coal mine for $30mil and then sold it to MCC for $275mil. Not a bad trade.


----------



## Trembling Hand

Calliope said:


> Noika, I have a good news story for your tomentors.
> 
> In the Brisbane paper today they had a list of the 10 top Queenslanders in the 2008 BRW Young Rich List. And guess what;
> 
> Four of them were hedge fund traders.




Yeah and they are *long micro-cap Asian* funds!!!!!!!!

Facts, my friends,  help bust a lot of confusion.


----------



## sam76

The Crusty boys definately deserve every penny they get.

They are crazy mofos!


----------



## nioka

Calliope said:


> Noika, I have a good news story for your tomentors.




I thought I had done with this thread but I have to comment here. Don't label them tomentors, I don't consider that I have been tormented, I wouldn't allow that to happen. never have, never will. Verbally challenged, but over 70 odd years ago I was told that "sticks and stones may break your bones but words can never hurt you."
 If someone insults you the best way to infuriate them is to agree with them.

That's enough rot, back to profitable investing.


----------



## nomore4s

nioka said:


> That's enough rot, back to profitable investing.




Just because you call it "investing" doesn't change the fact that you are a trader. All you do is a form of pairs trading - just because you use F/A instead of T/A does not make it investing.

Even the tax dept class you as a trader.

You're quite happy to run around this forum boasting about how much money you made last FY but the thing is you've made it by trading stocks - how is this any different to any of the traders you dispise for not being legitimate investors?
You profit from the swings and roundabouts of the market, again no different from any other trader in the world.
Now you want to kick up a stink about "unethical" traders & hedge funds manipulating the market by shorting but were quite happy to profit from it while prices were going up - a bit hypocritical don't you think?

You've also jumped on your high horse in this debate but when asked questions about your stance and how this might affect other aspects of the market you obviously have no understanding of you deflect the questions and refuse to answer instead of just admiting you've got in over your head and you don't understand how that part of the market works. And then wonder why people take you to task.

<end of rant>


----------



## lesm

Looks like the Church of England has something to say.



> *British bishop calls speculators 'Bank Robbers'*
> 
> LONDON, Sept 25 (Reuters) - A top Church of England bishop has told bankers those who speculate on falling share prices in the financial sector are 'Bank Robs'.
> 
> Archbishop of York John Sentamu, the church's second-ranking clergyman, targeted short-sellers who he said had driven Britain's biggest mortgage lender HBOS to accept a takeover bid from rival Lloyds TSB.
> 
> 'To a bystander like me, those who made 190 million pounds ($353 million) deliberately underselling the shares of HBOS ... are clearly Bank Robbers and asset strippers,' he said in a speech to international bankers in London's financial district on Wednesday evening.
> 
> Sentamu's speech coincided with the publication of an article by the leader of the global Anglican church, Archbishop of Canterbury Rowan Williams, also calling for better regulation of financial markets.
> 
> In an article in the Spectator magazine, Williams said the crisis 'exposes the element of basic unreality in the situation -- the truth that almost unimaginable wealth has been generated by equally unimaginable levels of fiction'.
> 
> Short sellers -- who sell borrowed stock hoping its price will fall so they can buy it back more cheaply -- have faced strong criticism for aggressively targeting banks such as HBOS, driving down their shares and undermining investor confidence.
> 
> Responding to the concerns, Britain and the United States have temporarily banned short-selling of financial stocks.
> 
> 'We find ourselves in a market system which seems to have taken its rules of trade from 'Alice in Wonderland', where the share value of a bank is no longer dependent on the strength of its performance but rather on the willingness of the government to bail it out,' Sentamu said.
> 
> Williams also criticised lending and borrowing that was not about 'equipping someone to do something specific, but exclusively about enabling profit'.
> 
> EMPEROR'S NEW CLOTHES
> 
> Probing the causes of the global financial market crisis, Williams criticised some financial transactions as the invisible 'Emperor's new clothes'.
> 
> A collapse in U.S. subprime mortgages -- loans to borrowers with patchy credit histories -- has sent shockwaves through the global financial system.
> 
> Banks bundled together subprime mortgages and then parcelled them out to investors who thought they carried little risk. As liquidity dried up, the value of these securities has been marked down sharply.
> 
> Some financial institutions have either collapsed, been nationalised or forced to sell out to stronger rivals.
> 
> U.S. President George W. Bush's administration has proposed a $700 billion plan to bail out the U.S. financial system.
> 
> Echoing politicians such as French President Nicolas Sarkozy who have criticised financial market excess, Williams said there would have to be greater regulation of the financial sector.
> 
> The Association of Private Client Investment Managers and Stockbrokers, grouping more than 200 firms, hit back at the bishops' criticism of short-selling.
> 
> 'It is market abuse which is wrong and this can occur both when holding either long or short positions,' the group's chief executive, David Bennett, said in a statement.


----------



## wayneL




----------



## nioka

nomore4s said:


> Just because you call it "investing" doesn't change the fact that you are a trader. All you do is a form of pairs trading - just because you use F/A instead of T/A does not make it investing.
> 
> Even the tax dept class you as a trader.
> 
> You're quite happy to run around this forum boasting about how much money you made last FY but the thing is you've made it by trading stocks - how is this any different to any of the traders you dispise for not being legitimate investors?
> You profit from the swings and roundabouts of the market, again no different from any other trader in the world.
> Now you want to kick up a stink about "unethical" traders & hedge funds manipulating the market by shorting but were quite happy to profit from it while prices were going up - a bit hypocritical don't you think?
> 
> You've also jumped on your high horse in this debate but when asked questions about your stance and how this might affect other aspects of the market you obviously have no understanding of you deflect the questions and refuse to answer instead of just admiting you've got in over your head and you don't understand how that part of the market works. And then wonder why people take you to task.
> 
> <end of rant>




WOW!!!

 Glad to see though that I have the same attitude to the matter as the Archbishop of York.

 And now I see the German finance minister has joined in to support my point.


----------



## nunthewiser

Sept. 26 (Bloomberg) -- China's cabinet agreed to let investors buy shares on credit and sell borrowed stock to help develop Asia's second-largest market after prices and trading volumes slumped, an official familiar with the plan said. The State Council signed off on a China Securities Regulatory Commission plan submitted this month to allow margin lending and short selling, said the official, who declined to be identified as he isn't authorized to speak on the issue. 


blessem


----------



## chops_a_must

nioka said:


> This has gone on so long and with my old age dementia I can't even remember the Question. By now you don't deserve an answer anyway.
> 
> End of story.




Wow.

And you really proved your point there.

Others have asked you a legitimate question and it deserves to be answered.

Should shorting be banned from oil?


----------



## wayneL

nioka said:


> WOW!!!
> 
> Glad to see though that I have the same attitude to the matter as the Archbishop of York.



Not many who know how markets work do though:

http://blogs.telegraph.co.uk/alex_s...rchbishops_are_wrong_shortselling_is_virtuous



> The archbishops are wrong: short-selling is virtuous
> Posted By: Alex Singleton at Sep 26, 2008 at 11:32:34 [General]
> Posted in: Politics
> Tags:
> Dr John Sentamu , Dr Rowan Williams , short-selling
> 
> Short-selling is like bank robbery, the normally-sensible Archbishop of York, Dr John Sentamu, told an audience on Wednesday. And yesterday, his colleague, Dr Rowan Williams, showed his hostility to short-selling in a Spectator article that, oddly, managed to name check Marx but not God.
> 
> Gallery Photo
> Archbishops of York and Canterbury both say short-selling is wrong
> 
> They are mistaken. Short-selling is a morally virtuous activity because it helps keep share prices honest.
> 
> The stock market acts as a big debating chamber. Each day between 8am and 4:30pm, investors argue about the value of each of the listed companies, based on their assessments of a company's likely future success.
> 
> It works because investors who are most accurate in their assessments secure the highest returns. That benefits the rest of the economy because the companies investors judge as having the best future plans are able to get the funding to expand.
> 
> *However, if the only people who were allowed to participate in the debate about a stock were long-term stockholders, the incentive - if the books were cooked, or if there was some other hidden problem - would often be for everyone involved to keep stum.
> *
> Investors who sell short make the stock exchange function more effectively by providing a counterbalance. They give a financial incentive to tell the truth about companies and help push the price down to a more accurate level.
> 
> Short-selling "vultures" were blamed by Enron founder Kenneth Lay for pushing down Enron's share price before it collapsed. But they provided a useful service, hastening the demise of a company engaged in fraudulent accounting.
> 
> And Tyco campaigned against short-selling, paying for full-page advertisements in American publications; but here too the short-sellers provided a useful role in forcing out a director who had been involved in misappropriating over $400 million from the company.
> 
> *Certainly, spreading false rumours in order to profit from short selling is unethical, but it is worth noting that most of the false rumours aimed at influencing stock are falsely positive ones, aimed at raising the price of a stock.*
> 
> Needless to say, pulpits up and down the land this Sunday will be used to attack short selling by *economically-illiterate clergy* who think they are standing up against sin - but who, like the archbishops, are accidentally attacking virtue.
> 
> UPDATE: The Archbishop of York's office have been in touch to say that the Archbishop was not saying that short-selling is like bank robbery, just that: "To a bystander like me, those who made £190million deliberately underselling the shares of HBOS, in spite of its very strong capital base, and drove it into the bosom of Lloyds TSB Bank, are clearly bank robbers and asset strippers."


----------



## chops_a_must

I'd say the clergy are incredibly economically literate Wayne...

After all, for centuries they stole and controlled the wealth of the unquestioning, uneducated and illiterate masses. It's a pity none of them could short the church. They might have had to live up to their actual words and teachings then.


----------



## wayneL

chops_a_must said:


> I'd say the clergy are incredibly economically literate Wayne...
> 
> After all, for centuries they stole and controlled the wealth of the unquestioning, uneducated and illiterate masses. It's a pity none of them could short the church. They might have had to live up to their actual words and teachings then.




LOL good point.


----------



## lesm

wayneL said:


> Not many who know how markets work do though:
> 
> http://blogs.telegraph.co.uk/alex_s...rchbishops_are_wrong_shortselling_is_virtuous






> 'It is market abuse which is wrong and this can occur both when holding either long or short positions,'




The statement in the last paragraph in the article related to the Archbishop's comments above says it all.

Market abuse does occur on both sides of the market and is not solely related to shorting activity.

The emotive element associated with people's views on shorting gets in the way of the facts.

Cheers.


----------



## lesm

chops_a_must said:


> I'd say the clergy are incredibly economically literate Wayne...
> 
> After all, for centuries they stole and controlled the wealth of the unquestioning, uneducated and illiterate masses. It's a pity none of them could short the church. They might have had to live up to their actual words and teachings then.




Good point chops.

What is one the wealthiest organisations/institutions in the world?


----------



## chops_a_must

lesm said:


> Good point chops.
> 
> What is one the wealthiest organisations/institutions in the world?




Depends if you call me an institution or not.


----------



## Garpal Gumnut

Without the ability to short there will be a lack of liquidity.

You buy a piece of furniture. (I owe this analogy to the ABC Counterpoint)

You pay money for the piece of furniture.

The furniture shop is shorting the piece of furniture.

They sell the furniture to you with the intention of delivering it.

They will get it from the manufacturer in 1 week and deliver it to you.

This is a short.

If it is banned.

No furniture.

No trading of furniture as it is impossible to keep all the furniture that people want on the floor.

It is pure foolishness to ban short selling.

gg


----------



## wayneL

Hey GG 

I used that very same analogy here weeks ago. 

Anyway, here's an interesting development:



> Wall Street Firms Provide Way Around Short-Sell Ban
> 
> http://www.cnbc.com/id/26891418
> 
> Hedge funds executives have told CNBC that several Wall Street firms are marketing a new hedging product that would allow them to "short" stocks””even those on the banned short sale list.
> 
> The new "product" is being pitched to major hedge funds today to gauge their interest””it's unclear if any funds have agreed to implement it........... etc


----------



## chops_a_must

ROFLMFAO.

Where have we heard this sort of stuff before?


----------



## wayneL

Damien Reece in The Torygraph this evening:



> I've very much enjoyed the interventions of the Archbishops of Canterbury and York in the credit crunch debate. Their criticisms reflect a strong feeling that markets these days lack morality.
> 
> But markets have always lacked morality. Their success has been based on being amoral. Free markets don't discriminate. Operating within legal frameworks, their amorality is the best way to distribute scarce resources, everything from corn seed to capital, rather than leave those decisions to central planners.
> 
> If there is a question of morality, then markets are the most moral systems of all in the way they enable liberty.* Like archbishops, markets are not infallible and are guilty of mistakes. *They get pricing wrong – the recent mispricing of risk, which has caused the credit bubble, being one of their biggest.
> 
> There are *clear contradictions in capitalism, just as there are in the views of Dr Rowan Williams and particularly the rather more outspoken Dr John Sentamu.*
> 
> His views are passionately held.* But perhaps he should review his church's own wealth, with billions tied up in the very markets which he attacks for harbouring "asset strippers", a practice that was not exactly absent when the Church of England was created with the dissolution of the monasteries. *



OOOOOMPH!

ROTFL!


----------



## nioka

chops_a_must said:


> Wow.
> 
> And you really proved your point there.
> 
> Others have asked you a legitimate question and it deserves to be answered.
> 
> Should shorting be banned from oil?



 You don't deserve an answer but like the terrible two year old in the supermarket you will keep screaming until you get either a clip in the ear or get your lolly. To shut you up I will give you my answer. 

 Shorting a product can not be compared to shorting a stock. Shorting oil can not be used to bring a company towards an undeserved bankrupsy. Targeted shorting can (and has) been used to bankrupt companies or to drop their value for other reasons. You can not dispute this fact.

 Therefore I have no attitude one way or the other regarding futures trading in the likes of oil, wheat, gold, silver, nickel etc. In some cases it is probably a necessary business activity as an insurance against uncertain prices.

 Now that will open another can of worms as you will twist this answer to suit your argument. As I value every moment of my time you may not be able to engage me to debate this matter further. You can accept my reasoning as set in stone, as yours seems to be. THE END>>>


----------



## mazzatelli1000

nioka said:


> Targeted shorting can (and has) been used to bankrupt companies or to drop their value for other reasons. You can not dispute this fact.




Nioka, 
I dont need to change your views as whatever works for you, then good.
But for the sake of public forum there will be opposing views and dissection of each others post.

The relationship I have quoted, will seem the as if there is a direct relationship between shorting and the company tanking.

If anything the company would have been poorly managed and not deserving of its over valuation that would attract short sellers to that particular stock in the first place. As many have reiterated - short sellers can try and target a strong company and it will have minimal effect on the company's operations.  There will be reputational risk, but its the companies assets and operations which will primairily determine whether it will continue to stay afloat, not the share price.

Also the impact of commodities trading is much more far reaching than just hedging delivery prices. It has inflationary impacts that eventually impact the stock market. Banning shorts in the commodities market will not be welcome.

Just my thoughts for future readers


----------



## chops_a_must

nioka said:


> Shorting a product can not be compared to shorting a stock. Shorting oil can not be used to bring a company towards an undeserved bankrupsy. Targeted shorting can (and has) been used to bankrupt companies or to drop their value for other reasons. You can not dispute this fact.



My original gripe with you was about delta hedging.

Which in the case of any physical delivery of product, at its core, is entirely necessary to any market, vis a vis, all markets.

From what I can gather about the sub-prime disaster, is that the IB's were not hedging to delta, artificially the opposite in fact, hence the problem. They were carrying and fronting longs, at the same time they were long in the market they were dealing with. The opposite now seems to have been the case for the firms that have survived.

Despite all the rhetoric on here from yourself and others, no-one has as yet shown any example where a company has been bankrupted by short sellers. The companies that are failing are failing because no-one is prepared to deal with them, which is nothing to do with shorters.

I think your different view between products and stock is also flawed. Index futures contain stock, yet are a product.



> Therefore I have no attitude one way or the other regarding futures trading in the likes of oil, wheat, gold, silver, nickel etc.In some cases it is probably a necessary business activity as an insurance against uncertain prices.




Umm... without sellers there can be no buyers in the futures market. They are contracts.

But unlike short selling stock, shorting futures and similar products, as can be seen in the corporate bond market etc. has a massive MATERIAL impact on the companies themselves.

So shorting oil, or any other fundamental product can bring about bankruptcy in a company. Although if they are hedged, something impossible if a broking firm for the company cannot do delta hedging, that may not happen.



> Targeted shorting can (and has) been used to bankrupt companies or to drop their value for other reasons. You can not dispute this fact.



This comment is staggering.

Please someone give an example of shorters bankrupting a company. Please. Someone. Anyone.

And the comment implies you honestly don't think directors pump up share prices for various reasons. Absurd. But as most of us know, it ends up being a nil nil result in the end anyway.

Why do you think WBC and BOQ have held up well? I could just as easily short them as NAB, BNB etc.

At the end of the day, prices reach a point where people are prepared to buy.

But what your opinion supposes is that people and institutions should forego risk management at a time where risk aversion, and risk punishment is at an all time high, when looking at a good buying entry point. It makes no sense.


----------



## cuttlefish

nioka said:


> Shorting a product can not be compared to shorting a stock.




Nioka - I had this difference in mind when the question came up - was wondering whether you would come up with it (I would replace the word product with commodity though).

In theory there is an unlimited supply of commodities so on that basis a short seller is always capable of eventually delivering.



> Shorting oil can not be used to bring a company towards an undeserved bankruptcy.




This is nonsense imo and where you mistake shorting bringing a company down when its poor financial performance that brings down companies.

I want to post more on this topic of commodities vs stocks later but for now a quick question  (one which if you think it through will help to illustrate a point.)

What would be the result of a MASSIVE shorting campaign on the share price of a company.  Lets say a company has 100 million shares on issue - what happens if there is a HUGE naked short selling campaign on that company where shorters sell hundreds of millions of shares to drive the price right down to virtually zero?   

Since the company has been shorted so heavily and heavy shorting 'bankrupts' a company in your opinion - would you sell that stock if you knew a huge campaign like that was in process and was the cause of the price falling?

(forget legislative rules about limits on shorting - this is a hypothetical question to illustrate a key point about shorting).


----------



## It's Snake Pliskin

chops_a_must said:


> My original gripe with you was about delta hedging.
> 
> Which in the case of any physical delivery of product, at its core, is entirely necessary to any market, vis a vis, all markets.
> 
> From what I can gather about the sub-prime disaster, is that the IB's were not hedging to delta, artificially the opposite in fact, hence the problem. They were carrying and fronting longs, at the same time they were long in the market they were dealing with. The opposite now seems to have been the case for the firms that have survived.
> 
> Despite all the rhetoric on here from yourself and others, no-one has as yet shown any example where a company has been bankrupted by short sellers. The companies that are failing are failing because no-one is prepared to deal with them, which is nothing to do with shorters.
> 
> I think your different view between products and stock is also flawed. Index futures contain stock, yet are a product.
> 
> 
> 
> Umm... without sellers there can be no buyers in the futures market. They are contracts.
> 
> But unlike short selling stock, shorting futures and similar products, as can be seen in the corporate bond market etc. has a massive MATERIAL impact on the companies themselves.
> 
> So shorting oil, or any other fundamental product can bring about bankruptcy in a company. Although if they are hedged, something impossible if a broking firm for the company cannot do delta hedging, that may not happen.
> 
> 
> This comment is staggering.
> 
> Please someone give an example of shorters bankrupting a company. Please. Someone. Anyone.
> 
> And the comment implies you honestly don't think directors pump up share prices for various reasons. Absurd. But as most of us know, it ends up being a nil nil result in the end anyway.
> 
> Why do you think WBC and BOQ have held up well? I could just as easily short them as NAB, BNB etc.
> 
> At the end of the day, prices reach a point where people are prepared to buy.
> 
> But what your opinion supposes is that people and institutions should forego risk management at a time where risk aversion, and risk punishment is at an all time high, when looking at a good buying entry point. It makes no sense.




Good post.


----------



## wayneL

Who do we blame now for tanking shares?


----------



## It's Snake Pliskin

wayneL said:


> Who do we blame now for tanking shares?




Exactly Wayno!

Perhaps the BANK purchasing by governments?


----------



## cuttlefish

And no shorting means no short covering rallies to give it some bounce again the next day either.

(as an aside - the tendency for some ASX stocks to put in a small sharp rally towards the close of the session, that looks a lot like short covering, makes me think that in spite of the ban there is still a bit of intraday shorting activity going on.).


----------



## cuttlefish

Not looking good at the moment is it - though the US day's not over yet either I suppose - might rally strongly if they actually pass it now - possibly a good little psychological game - let the public see how the market would have reacted by it not passing, let the dissenting reps see the effect of a no vote on the market as well, and then pass it second time around perhaps?


----------



## cuttlefish

Just looked after posting that and I see they aren't planning on voting on it again today.


----------



## mazzatelli1000

d@mn these short sellers are good, how are they driving the markets down even when most of them are banned


----------



## Trembling Hand

See the No Short list dropped 12% last night.

No shorters to offer bids?? Ha!! give the fools what they want.

http://www.bloomberg.com/apps/quote?ticker=BUSNSHRT:IND


----------



## chops_a_must

Eh gad Brain.

When will this shorting of companies to the wall end?


----------



## Green08

Reports that NYSE Euronext [NYX  40.37    1.19  (+3.04%)   ] CEO Duncan Niederauer said the SEC was considering reinstating the uptick rule were good news to Cramer. He called the federal regulator’s recent short-selling ban “ludicrous.”

“Welcome the shorts,” Cramer said. “The shorts have been dead right” about this market.

The SEC had repealed the uptick rule, which requires a stock to tick up in price before it’s sold short, under the stewardship of Chairman Christopher Cox. Cramer’s been saying that a lack of short-selling rules has been a big cause of the collapse of some of Wall Street’s most venerable institutions. But to ban the practice out right was a mistake.

“Christopher Cox is very unsophisticated.,” Cramer said. “He’s not the right man for the job.”

“I hope someone comes in and does a better job than he does,” he said

http://www.cnbc.com/id/26975872


----------



## subi1

wayneL said:


> Who do we blame now for tanking shares?




I thought a lot of shorters were saying shares could only go up if shorting was banned.

It was also interesting to see the nice rise yesterday without the shorters buying back in.  Tuesday was also an interesting day with buyers appearing on a bad day and limiting asx falls 

A few myths are being dispelled.

For the record I am against naked short selling where the shares are not even in existence.

In my opinion the last week and a half proves that markets can go up and down without shorters and that share prices will still go down without shorters.

Just my thoughts and opinions are welcomed.


----------



## Trembling Hand

subi1 said:


> I thought a lot of shorters were saying shares could only go up if shorting was banned.




LOL!!


----------



## smithy

' Shorting causes upward pressure on prices, not downward ' ? What a moronic suggestion !?!


----------



## Trembling Hand

smithy said:


> ' Shorting causes upward pressure on prices, not downward ' ? What a moronic suggestion !?!




Well actually they have been shown to do that from time to time. Its called a short squeeze. Who is the moron??


----------



## wayneL

Trembling Hand said:


> Well actually they have been shown to do that from time to time. Its called a short squeeze. Who is the moron??



Howzat!!!

Bowled out on the first ball!! lol

Golden Duck award for smithy.


----------



## Trembling Hand

wayneL said:


> Golden Duck award for smithy.



Love it!! Perfect..


----------



## Naked shorts

wayneL said:


> Howzat!!!
> 
> Bowled out on the first ball!! lol
> 
> Golden Duck award for smithy.




HAHAHAH omg rofl, I am in tears


----------



## jesterx

Naked shorts said:


> HAHAHAH omg rofl, I am in tears




I can still short with CMC markets...cool!


----------



## smithy

Well actually they have been shown to do that from time to time. Its called a short squeeze. Who is the moron??


Thanx for the update Trembler. 'From time to time' ain't good enough. We're talking generally and now. Sure drove prices up when it was banned didn't it ? 
U could always get a real job ?


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## smithy

'Markets can still go up and down without shorts ' ??? 

Simply brilliant ....... ur no bowler at all. Haha.


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## Trembling Hand

smithy said:


> Thanx for the update Trembler. 'From time to time' ain't good enough. We're talking generally and now. Sure drove prices up when it was banned didn't it ?



 Wrong again Smithy. They are now BELOW the point where they were banned. LOL.

Thats a double innings DUCK.



smithy said:


> U could always get a real job ?



 Nah prefer sticking around here getting flamed by wallies while I take money off them in the market.


----------



## smithy

Trembling Hand said:


> Wrong again Smithy. They are now BELOW the point where they were banned. LOL.
> 
> Thats a double innings DUCK.
> 
> Nah prefer sticking around here getting flamed by wallies while I take money off them in the market.




How very selective of you Trembler ........ seem to recall just a slight jump on the day after the banning ? And you ? or is ur memory shot. No need to get personal ....... ur brilliant mind well above that I would have assumed.


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## Trembling Hand

smithy said:


> How very selective of you Trembler ........ seem to recall just a slight jump on the day after the banning ?........




Smithy it has been going DOWN ever since the second hour of no shorting??

The jump lasted all of 1 hour?? Where am I being selective? The short ban has not stopped stocks going down! Because maybe the stocks are going down because no one wants to hold them because the economy is going down the :flush: not becasue a you can short them.


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## smithy

Trembling Hand said:


> Smithy it has been going DOWN ever since the second hour of no shorting??
> 
> The jump lasted all of 1 hour?? Where am I being selective? The short ban has not stopped stocks going down! Because maybe the stocks are going down because no one wants to hold them because the economy is going down the :flush: not becasue a you can short them.




The 'rush' for traders and brokers to cover shorts actually ran for days. Nonetheless, yep .....other factors have impacted on share prices ?  Reallllly ? .......simply more brilliance from u again (there's just no end to it) !!!


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## chops_a_must

smithy said:


> The 'rush' for traders and brokers to cover shorts actually ran for days. Nonetheless, yep .....other factors have impacted on share prices ?  Reallllly ? .......simply more brilliance from u again (there's just no end to it) !!!




^^^^^^ Someone please claim their alias.


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## skyQuake

chops_a_must said:


> ^^^^^^ Someone please claim their alias.




Hehe, you're losing your resident troll status


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## Out Too Soon

tech/a said:


> *This is what your after guy's*
> 
> *THE TRILLION DOLLAR SECRET*
> 
> 
> 
> 
> http://www.cornerstoneri.com/comments/TrillionDollarSecret.htm




Tech/a is right in directing everyone to this excellent article. 
The disaster for our worlds financial system is that we are all playing with pretend money at some level or other. Niokas & others stance isn't as naive as made out. Too stop the personal attacks though the people who regularly make money out of shorts should be banned from this thread.

Somebody once warned me " never come between someone and their income ". :


----------



## Out Too Soon

Also the survey should be redesigned. (I dont know how to copy the survey bit)

Should shorting be suspended/banned?

suspended               ______________                        

banned                    ______________

no                          _____________                              1%

no (I regularly short)  ______________                           56%

never come between a shorter & his pot of gold  :behead:


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## wayneL

In light of recent comments, can some of the anti shorts answer two questions

Should shorting be banned in the futures markets?

Does shorting cause futures prices to go down?

Please... I am aching to hear answers to these so we can go for the season duck.


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## lesm

wayneL said:


> In light of recent comments, can some of the anti shorts answer two questions
> 
> Should shorting be banned in the futures markets?
> 
> Does shorting cause futures prices to go down?
> 
> Please... I am aching to hear answers to these so we can go for the season duck.




Hey Wayne,

Can we add spot fx, as well?

The answers and rationale will be intriguing.


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## subi1

wayneL said:


> In light of recent comments, can some of the anti shorts answer two questions
> 
> Should shorting be banned in the futures markets?
> 
> Does shorting cause futures prices to go down?
> 
> Please... I am aching to hear answers to these so we can go for the season duck.




Wayne 

Why don't you save us all the trouble and just let us know what you think. 

I thought this thread was on shorting ASX stocks but if you have to enlighten us on the futures market go ahead.


----------



## wayneL

subi1 said:


> Wayne
> 
> Why don't you save us all the trouble and just let us know what you think.
> 
> I thought this thread was on shorting ASX stocks but if you have to enlighten us on the futures market go ahead.



I want answers to these fair questions first.

After several days of myself and others asking them, not one supporter of the short ban has been forthcoming to answer.

Something in that maybe?


----------



## subi1

wayneL said:


> I want answers to these fair questions first.
> 
> After several days of myself and others asking them, not one supporter of the short ban has been forthcoming to answer.
> 
> Something in that maybe?




Fair enough. I woke up with a headache and couldn't be bothered.

I don't know how the futures market works although from my point of view it does seem a good way for the big boys to control prices.

I will wait for your answer.

I still believe that people shorting who don't own the stock should be banned.
ie naked shorting. I also believe that super funds should be banned from lending out stock to hedge funds and broking firms that support the hedge funds.

Have a good day


----------



## lesm

subi1 said:


> Wayne
> 
> Why don't you save us all the trouble and just let us know what you think.
> 
> I thought this thread was on shorting ASX stocks but if you have to enlighten us on the futures market go ahead.






sam76 said:


> pretty simple question really...
> 
> let's say world wide...




The above is the OP's initial post that started this thread. It was never restricted to the ASX. Hence, Wayne's questions are actually in context with the initial post and the question it raised.


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## Bushman

wayneL said:


> I want answers to these fair questions first.
> 
> After several days of myself and others asking them, not one supporter of the short ban has been forthcoming to answer.
> 
> Something in that maybe?




Wanting to avoid entrapment I would say.


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## It's Snake Pliskin

wayneL said:


> I want answers to these fair questions first.
> 
> After several days of myself and others asking them, not one supporter of the short ban has been forthcoming to answer.
> 
> Something in that maybe?




When the world was flat story was being bandied about years ago I am sure there were no answers forthcoming by the group who were saying that the world was flat.

It is easy to believe without thought.


----------



## subi1

lesm said:


> The above is the OP's initial post that started this thread. It was never restricted to the ASX. Hence, Wayne's questions are actually in context with the initial post and the question it raised.




Fair enough.

Did it say anything about futures or was just because shorting had been banned on the ASX


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## subi1

Bushman said:


> Wanting to avoid entrapment I would say.




It definately had occurred to me. That is why I was asking Wayne to explain


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## nioka

Bushman said:


> Wanting to avoid entrapment I would say.



 Or attract the words Moron, Communist, Troll etc.


----------



## wayneL

Bushman said:


> Wanting to avoid entrapment I would say.



So a ban on shorting futures is untenable?


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## chops_a_must

nioka said:


> Or attract the words Moron, Communist, Troll etc.




I'll gladly take those troll and communist titles back if you so desire...


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## nick2fish

IMO,
Naked short selling should be banned
Covered Shorting should be suspended and was. A correct move and it will be lifted once this once in one hundred year bear market occurrence subsides.

With the US one step away from depression (not recession) the deck was stacked too much in the hands of the hedge funds to print money.

The market has been operating in a normal fashion since the suspension. Once existing shorts were covered resulting in an upward move. 
Nobody expected the market to go up in these times but it has been losing ground in a more orderly fashion without the pressure of short-sellers. 

See shorters only contribute to a rising market if they get caught out, which is not the name of the game. You borrow, sell , buy back but not at the price you originally borrowed at but lower so when you return your borrowings you have the difference as profit. 

How you think that makes for a healthy market state in the worst bear market of the century just boggles the mind.

MQG  a perfect example. 

One article in the Australian and the stampede was started(How much was the journo paid in the back pocket for that one is anyones guess) Just because you don't own a targeted share doesn't make it okay. Thousands of ordinary Aussies own a bit of MQG through their super and FMG and BHP.


These are dark times that need extreme measures like a 700 billion cheque for instance. To you shorters, take your profits and go to the Bahamas for a month and Relax 

The suspension is lifted in the US on Thursday and ASX is bound to follow. 
Thank you for your patience and cheers Smithy


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## Trembling Hand

nick2fish said:


> The market has been operating in a normal fashion since the suspension. Once existing shorts were covered resulting in an upward move.
> Nobody expected the market to go up in these times but it has been losing ground in a more orderly fashion without the pressure of short-sellers.




Normal??

Ordinary??

The stats would suggest it hasn't been like this for some time. And that is AFTER the short ban.


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## wayneL

Trembling Hand said:


> Normal??
> 
> Ordinary??
> 
> The stats would suggest it hasn't been like for some time. And that is AFTER the short ban.



Well at least something is going up.:::::

(plus the biggest points fall on record AFTER the ban)


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## nick2fish

Yes but put that chart against the backdrop of the failed passage of congress bailout which caused the biggest one day drop on Wall Street since the Depression you expect a bit of volatility don't you. Anyway I've expressed my opinion and have not the time nor inclination to go tit for tat.

Cheers and good trading (when you will be allowed to again   )


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## wayneL

nick2fish said:


> Cheers and good trading (when you will be allowed to again   )




ROTFL

The beauty of futures and options, we're still shorting the crap out of this. 

...and if you trade US you can still short non-financials to your hearts content.

It's business as usual chum. :band


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## smithy

nick2fish said:


> IMO,
> Naked short selling should be banned
> Covered Shorting should be suspended and was. A correct move and it will be lifted once this once in one hundred year bear market occurrence subsides.
> 
> With the US one step away from depression (not recession) the deck was stacked too much in the hands of the hedge funds to print money.
> 
> The market has been operating in a normal fashion since the suspension. Once existing shorts were covered resulting in an upward move.
> Nobody expected the market to go up in these times but it has been losing ground in a more orderly fashion without the pressure of short-sellers.
> 
> See shorters only contribute to a rising market if they get caught out, which is not the name of the game. You borrow, sell , buy back but not at the price you originally borrowed at but lower so when you return your borrowings you have the difference as profit.
> 
> How you think that makes for a healthy market state in the worst bear market of the century just boggles the mind.
> 
> 
> 
> 
> MQG  a perfect example.
> 
> One article in the Australian and the stampede was started(How much was the journo paid in the back pocket for that one is anyones guess) Just because you don't own a targeted share doesn't make it okay. Thousands of ordinary Aussies own a bit of MQG through their super and FMG and BHP.
> 
> 
> These are dark times that need extreme measures like a 700 billion cheque for instance. To you shorters, take your profits and go to the Bahamas for a month and Relax
> 
> The suspension is lifted in the US on Thursday and ASX is bound to follow.
> Thank you for your patience and cheers Smithy







Thanx Nick2. Agree & very well elucidated IMHO. 
Cheers. Smithy ........ 
(Message for Trembler & Wayne - Old dogs do learn new tricks plus retain old ones that worked ! The big plus that allows us to flex is that we are not burdoned by massive egos such as yours  :0)  ............. )


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## smithy

wayneL said:


> Well at least something is going up.:::::
> 
> (plus the biggest points fall on record AFTER the ban)






Exposed !!! How embarrassing for all of us.
Please pull your pantoys up now Wayne ........ terurrrrck. It's enough. Your position is indefensible. 
As for u Trembling Knees ...... marvy holiday shots from NZ ...... how kind of u to share them with us all. (help is available).


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## wayneL

smithy said:


> Exposed !!! How embarrassing for all of us.
> Please pull your pantoys up now Wayne ........ terurrrrck. It's enough. Your position is indefensible.
> As for u Trembling Knees ...... marvy holiday shots from NZ ...... how kind of u to share them with us all. (help is available).



Hi smithy,

Sledging from the Grandstand after being bowled out for a duck, eh?

Well it's all business as usual for me, criticism from losers is par for the course really.

Happy trading to you.


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## deadset

The short sellers might be welcomed back soon.


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## Aussiejeff

deadset said:


> The short sellers might be welcomed back soon.




Better hurry up then. Won't be much left worth "shorting" in another week...


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## Trembling Hand

smithy said:


> As for u Trembling Knees ...... marvy holiday shots from NZ ...... how kind of u to share them with us all. (help is available).




Very weird creature smithy.

As for your question, I'm happy to point out yet again you are wrong. I actually haven't shorted an individual stock since Jan 08 (from memory).

My pro shorting stance doesn't come from the need to short stocks but for the need to have a balanced market. 

Unlike the anti-short side who are motivated by their own needs for stocks and other assets to be in a perpetual bull market no mater what that does to the poor suckers holding the parcel when it pops. Not to mention the damage that is done to the environment when bull markets race ahead of themselves producing development solely for developments sake. Feeding on its self, devouring productive capital and eventual creating slumps that effect mostly the poor suckers on the bottom of the pile as they are the last in and have the most to lose.

But now I have stated that I realize your position and therefore your bias. Your are a poor sucker. I'm sorry for that. And will do what I can as a speculator of fair value to stop the next bull market madness from getting out of control by shorting the **** out of the next sucker rallies.

Please come back when you fall in love with the next rally. That will tell me which one the suckers are getting into. :::::


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## Temjin

deadset said:


> The short sellers might be welcomed back soon.




They already have, or should have soon, in China anyway. 

http://chinadigitaltimes.net/2008/10/china-will-test-short-selling-margin-lending/



> *China Will Test Short Selling, Margin Lending
> 
> From Wall Street Journal:
> China’s securities regulator said Sunday it would shortly begin a trial program allowing securities firms to engage in margin lending and short selling, long considered necessary to help the country’s stock market mature beyond its repeated boom-bust cycles.
> The China Securities Regulatory Commission said in a statement on its Web site that the program would be started, but it didn’t give a timeline. It said the brokerages allowed to participate in the program would be decided based on their net capital size and risk capabilities, among other criteria. The trial would be expanded at some point, it said.
> A broker talks on the phone at a brokerage firm in Hong Kong.
> Margin trading allows investors to borrow money to buy shares. Short selling allows investors to sell borrowed stocks, typically in a bet that prices will fall.​*



*

Who knows? If they do introduce short selling back in, and the Shanghai Composite Index stopped tanking and actually creeped back up again independently of the world (which they have done so), other governments would start easing the ban again. Or do a media blackout on how effective the introduction of short selling in the Chinese market was. ​*


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## It's Snake Pliskin

And in Japan they are selling because they are panicking.

http://search.japantimes.co.jp/cgi-bin/nb20081007a1.html


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## sam76

Will the powers that be extend the ban tonight in The US?


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## chops_a_must

sam76 said:


> Will the powers that be extend the ban tonight in The US?




I don't think so.

The US traders are all bitching that the short ban has created liquidity problems in certain stocks, so they are getting larger than normal moves, and the exceptional volatility is keeping buyers away.


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## Bushman

Ok so the banning of 'shorts' did not work. 

So what next? I say ban media reporting of the credit crunch. Nasty bunch the media. Mere parasites profiting from the gloomy sentiment and are obviously undermining the good work of treasury departments the world over. 

So join me - BAN MEDIA REPORTING, BAN MEDIA REPORTING.


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## Gundini

Interesting thought Bushman,

BAN MEDIA REPORTING! 

Then we all short News Limited.. 

I guess to a certain extent they were able to do that for years in Russia and China. But nowdays, the advent of the internet would not let many secrets remain undiscovered. 

Could you imagine if The Daily Reckoning ran the press rather than News Limited! The whole financial system of the planet would have collapsed 10 years ago.

I agree with you re the media, causing fear and panic. The markets would be alot more stable without their "after the fact" reporting. I mean, these sort of headlines should have been posted 12 months ago.

Maybe we should get behind banning EASY CREDIT!


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## prawn_86

Sorry, I have been away for the last week or so...

Are we still blaming the shorters for all this...?


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## It's Snake Pliskin

Well the ban is still being enforced for shorting. 
http://business.theage.com.au/business/shorting-no-go-covered-or-not-20081021-55iv.html

Will the market rise now there are still no shorters to be blamed?


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## sam76

Short Seller Taken to Court

We have no idea who Giovanni Spagnolo is. We don't know whether he is a professional trader, a small investor, a fund manager or anything else. 

But what we do know is the Australian Securities & Investment Commission (ASIC) has taken him to court for short selling. To be more precise, for naked short selling. You see, what Mr Spagnolo did was sell shares that he did not own. Furthermore, he didn't borrow the stock from anyone in order to deliver it on settlement. That is what makes it a naked short sell. 

We don't know the full details of the case other than what is on the ASIC website: 

"ASIC alleges that between 28 May and 24 October 2007, Mr Spagnolo sold shares and options that he did not own, contrary to Section 1020B(2) of the Corporations Act, in a practice known as 'short selling'... Mr Spagnolo applied for shares and options in capital raisings by the companies. Before they were issued, he agreed to sell them on the stock exchange. Mr Spagnolo failed to deliver the shares and options on the due date for settlement." 

The problem as we see it is that Mr Spagnolo appears to have done exactly what large institutions do as a matter of course. The main difference is that the institutions are permitted to do so while the private investor is not. 

The underwriter of a share issue can short sell stock in advance in order to reduce their exposure if they are left holding stock from a public offering or a placement. Yet it appears that private investors cannot do the same thing. 

We wonder if this is the best way to tighten up the rules on short selling. We don't think it is. There is a much simpler solution that could be easily implemented. 

ASIC and the ASX should just follow the same system that operates in Hong Kong. 

In Hong Kong investors must deliver stock to the exchange on the settlement day otherwise it triggers a 'buy-in.' That means if you want to short sell you must borrow the stock and deliver it to the exchange. If you don't then the exchange automatically buys the stock back for you, thus closing out the trade. 

It is a simple and effective way to almost eradicate naked short selling. It would not be difficult for the ASX to do the same here. It is just a case of whether they have the will to do so. 

Cheers.

Kris.

Taken from moneymorning


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## Naked shorts

sam76 said:


> The problem as we see it is that Mr Spagnolo appears to have done exactly what large institutions do as a matter of course. The main difference is that the institutions are permitted to do so while the private investor is not.




Hang on, are you telling me that this whole time, the ban on short selling has only been for *private *investors only!?

I also fail to see how this investor being prosecuted, how is someone able to get around all the brokerage houses complying with the ban? Did he make his own?


----------



## captain black

ASIC (as expected) will be lifting the ban on non-financial stocks from 19th Nov

http://www.asic.gov.au/ASIC/asic.ns...ing for non-financial securities?opendocument


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## sam76

so will the suspension be extended or will evil return finincial markets tomorrow? lol


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## sam76

SHORT-SELLING on non-banking stocks resumes today after an absence of almost two months, as discussions continue in Canberra on the details of new short-selling disclosure rules.

The ban on short-selling, put in place on September 21 by the Australian Securities and Investments Commission, was criticised by some market participants for hobbling the activities of hedge funds while, they said, increasing volatility in the market.

But ASIC has argued the ban was essential to prevent "unwarranted price fluctuations" and to protect the Australian market from being swamped by short-sellers after the practice was temporarily banned in other countries.

"The ban has been a huge burden, not just on the hedge fund industry but on all investors," said Kim Ivey, chairman of the Alternative Investment Management Association.

Mr Ivey said he expected a "huge improvement in liquidity" with the ban coming off.

"We know that the market has continued to fall since the ban was put in place and volatility has also increased," said hedge fund manager Tom Elliot.

The end of the short-selling ban, for non-financial stocks at least, will usher in an interim disclosure system put in place by the Australian Securities Exchange.

Under this system, brokers must report the short sales made by their clients to the ASX, which will then release a daily report on the total volume of short sales on individual stocks. The first data will be available on Thursday.

Corporate Law Minister Nick Sherry is yet to decide whether this exact regime will continue.

Last week, Mr Sherry introduced to Federal Parliament legislation banning naked short-selling and providing for disclosure of covered short-selling, but said it was not yet decided what length of time would lapse between reporting of short-selling information by brokers to the ASX and its public release.

Industry figures are concerned that daily release of short-selling positions could lead to rumour-spreading in the market and reveal closely guarded investment tactics. Senator Sherry said last week that he was "aware" of industry concerns and would consult with them on the issue.

Mr Ivey, in Canberra yesterday for discussions on the short-selling issue, favoured information being released every fortnight, rather than each day. The Investment and Financial Services Association was also opposed to daily positions being published.

The Securities and Derivatives Industry Association welcomed the end to the moratorium but said it would "wait and see" on the impact of the new rules.

The ban on covered short sales of financial stocks ends on January 27.

Covered short-selling is when a trader borrows shares, then sells them in the hope of buying them back at a lower price. Naked short-selling is the same, except that the seller has not arranged to borrow the shares.
http://business.theage.com.au/business/shortselling-to-resume-20081118-6aet.html


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## Aussiejeff

**NEWS FLASH**

Overnight, US bank Citigroup have called for *an immediate ban on shorting* - AGAIN!  

Do I detect *panic* setting in?


----------



## sails

Aussiejeff said:


> **NEWS FLASH**
> 
> Overnight, US bank Citigroup have called for *an immediate ban on shorting* - AGAIN!
> 
> Do I detect *panic* setting in?




For a stock that was trading near $60 and closed this morning at $4.71 - no wonder some panic starting to set in....


----------



## Pairs Trader

Aussiejeff said:


> **NEWS FLASH**
> 
> Overnight, US bank Citigroup have called for *an immediate ban on shorting* - AGAIN!
> 
> Do I detect *panic* setting in?




This is just a another weak attempt to shift the blame for whats happening with their share price. Prices don't go down because of short selling, they go down because a lack of bids, if there were truly value big $$$ would be supporting the share price and accumulating, however thats not the case and no one wants to hold the bag thus there's more offers than bids, simple.

Banning short selling has highly negative effects, it takes away liquidity, reduces ability to manage risk, takes away true price discovery and doesn't allow for mis-managed companies to be effectively priced.


----------



## Bushman

Guess what - the bans did not work (well according to this research paper anyway). But most of us knew that it was just a bit of propaganda to try and settle the nerves of the market participants. Disaster capitalism needs a scapegoat after all (short sellers, hedge funds, CEO pay, investment banks, the Greenspan put, oil traders etc, etc). 

Main findings (from article in Global Press Service): 
1. No strong evidence that restrictions on short selling changed the behaviour of stock returns. Stocks subject to the restrictions behaved very similarly both to how they behaved before their imposition and to how stocks not subject to the restrictions behaved. 

2. Comparing behaviour across countries where the nature of the restrictions differed, the authors found no systematic patterns consistent with the expected effect of the new regulations, i.e. no evidence of a reduced probability of large price falls.

3. The authors also found no sign of any detrimental impact of the constraints in terms of reduced efficiency of pricing. 

4. Regression analysis suggested that changes in stock returns were driven mainly by other factors affecting the financial sector as a whole rather than the restrictions on short selling. That is, some systematic changes in the behaviour of financial sector stocks could be discerned, but no strong evidence of a systematic impact of the restrictions could be identified.

But please, DYOR. Here is the link to the research paper. 

www.cass.city.ac.uk/media/stories/resources/the-impact-of-short-sales-restrictions.pdf


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## Aussiejeff

New Naked Short Ban rules commenced 8th Jan 2009. Full details can be found here..

http://www.cch.com.au/au/News/ShowNews.aspx?ID=29115&Type=F

Covered short ban on financials to stay until 29th Jan 2009.


----------

