Im on record as saying the defenders of rampant shorting are dix

Quote from failedpoet:

For whatever reason, short selling is always stigmatized as "wrong" but the point of trading is to make money.

I understand that the arguments to defend the recent short selling is specious at best but the argument that the absence of buying should be honored by holding back the shorts is just as weak. It's the law of supply and demand in action.

No one wants to catch a falling knife and if there was real value in these stocks then the shorts would be crushed in a hearbeat. If you want to argue fundamentals, how can anyone value a financial company that has virtually illiquid assets that cannot be valued at current market value? That's why Bear Stearns was offered $2/share that weekend.

Shorts are the yang to the yin. Accept it. Do you want to banish put options and keep call options as the only "game in town"? Why stop at shorts? Do you want to kill the derivative markets because of speculation?

These companies are public companies meaning that instead of debt in terms of bonds, they issued common stock which has always been susceptible to shorting. Otherwise, it's just the glorified Ponzi a.k.a. the Greater Fool theory, i.e. who's a greater fool to buy the stock at a higher price. Do you think that we can pass ALL debt and equity to sovereign wealth funds and foreign interests to support these prices? Eventually, the last one is left holding the bag with nothing to show fo it.

But not all of the financials have been crushed. Goldman has been hurt somewhat in terms of stock price but kept its head above water. In fact, until a few years ago, was a PRIVATE company, proof that you don't NEED to go public to be successful. I think the decision was put to a company vote as opposed to the underlying NEED. As a result, you have their creme-de-la-creme serving public office since (another topic but Paulson, Corzine, Cox and technically speaking Thain when he was with NYSE, I'm sure I'm missing other folks)

We could all bash heads and gnash teeth about this issue but the markets has been always about risk. The issue that concerns me most is that the financials might get bailed out by the U.S. taxpayer while our neighbors down the block might have to leave due to foreclosure with no help in sight.

In the end, the "shorts" exist for a reason. POT, GOOG, AAPL, RIMM, MOS are all high-flying stocks and I'm sure there exists some short interest but shorters don't short indiscriminately. These companies are red-hot and "shorters" know caveat emptor when treading here. It wouldn't take long to blow up an account any minute trying to short these stocks.

By the way, how can you justify the valuations of the stocks that I just mentioned? I don't claim to know the fundamentals but I'm sure their P/E ratios are ridiculous but obviously the prices are being supported because the sellers aren't there. Should we abate buying these stocks because of the dearth of sellers?

I doubt that I can convince you that there's nothing wrong with shorting but I don't know how you can explain how stocks go up. Like I said earlier, if there was value (like that "analyst" that valued LEH @ $31 {I think that was the target} last week) the shorts would've been squeezed and squeezed hard but short traders saw right through it.

Value is value... BUD got a better offer from $65 to $70 per share and ROH got bought out for 70+% premium to their previous day's stock price in THIS MARKET ENVIRONMENT.

To address the recent news on Naked Shorting, the SEC has always deemed it illegal but chooses now to enforce it? What were they doing when OSTK was trying to plead with the SEC on this matter a few years ago?

Sorry friend, but it appears that you NEED shorts to keep things in balance. Even re-instituting the uptick rule makes no sense. If that were the case, please let people "short" gasoline prices at the pump everytime the damn prices go up. ;^)
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ABSOLUTELY 100 PERCENT CORRECT.
 
Macke of Fast Money said something hilarious last night something to the effect:

If you get a call from your broker telling you that if you love GM at $20/sh then you'll love GM at $9/sh, smack him on the side of the head... whatever side you want if you're right-handed or left-handed.

Classic!
 
If LEH is well-capitalised, liquid, and hence undervalued, wouldn't the board order a stock buyback?

With the stock at $12 and change yesterday, down 75% in 2 months, surely it would create massive shareholder value, and crush the shorts, if they were to just buy back at $15 per share or higher.

Yet they don't take this obvious confidence-boosting, liquidity-proving step. I wonder why that is?
 
they dont need to stop shorting, they need only to stop NAKED shorting

if they think the 20% falls in stocks are due to shorters, then the 100% rises in 2006 and 2007 are due to... illegal buyers of stocks???
 
Quote from stock777:


If you inject enough fear , just about any stock that depends on its IMAGE to sustain its business can be driven down to nothing. It goes down because its going down.

I really think they should ban NEW short selling on these financials until things settle down. It is serving no purpose at all. If you are long and want to get out you can sell. No one will stop you. But bets against? It's not a god given right.

We would all be better off if these large brokers and banks could find a way to not go out of business. If its inevitable, then let it happen without knives being stuck in their backs to hasten the process.
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These stocks are going down because their business models are no longer viable and equity should take the hit.

These markets are seeking the truth. If you can't handle then get out.
 
I agree with you Failedpoet. While shorting is useful in the markets, a mechanism to make sure it is legitimate needs to be enforced. Naked shorting is another matter altogether, and that has led to serious problems for smaller companies in particular. I haven't seen anyone come out against shorting. It's naked shorting where you can end up with more shares sold short than exist. That's the problem.
 
Quote from piezoe:

I agree with you Failedpoet. While shorting is useful in the markets, a mechanism to make sure it is legitimate needs to be enforced. Naked shorting is another matter altogether, and that has led to serious problems for smaller companies in particular. I haven't seen anyone come out against shorting. It's naked shorting where you can end up with more shares sold short than exist. That's the problem.
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X Clearing can be five or more times the float. If there were no naked shorting, a raided stock would be a multiple higher, and they could raise money. Instead, I'll point out BKUNA, their equity price is destroyed, and they never got to raise the 400mm they wanted. So, everybody loses. If people wanted to put the 400 in, what's it to you? But as soon as the deal was announced , the stock was naked shorted to death, taking away any chance of the stock to possibly make it. Good bank? Bad bank? subjective. Market manipulation? Fact.

I've said on these boards time and time again that this rampant criminality would bring the world down around Wall St's head. That day is here; we will all suffer. If you watched those hearings yesterday, and you could look at the panel and hire any of those assholes to weed your garden, you're ahead o' me. And now, before the end of the year, they'll regulate our markets. Now. How are you going to make a buck????
 
Quote from stock777:

I'm gonna prove you are wrong with your own words.

If we had more rules and regulations we would NOT BE IN THIS MANURE PILE TO BEGIN WITH!!

Case Closed.
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Yes.....yes!

More regulation! What manure pile are you speaking of? Naked shorting, which was your original topic and not a manure pile. Or this "recession," which has much more to do with other things then shorting stocks.

Regulate everything and have the government insulate us from all bad things (communism). These banks did nothing wrong and deserved to be saved for handing out "no doc" and "stated income" loans (sarcasm).

And stocks should only go straight up. New highs are only buying opportunities. When companies are burning through cash and misleading the public, who are you to try and profit from bad things!

As Paulson said yesterday, "If you've got a bazooka and people know you've got it, you may not have to take it out. You're not likely to take it out."

Blank checks and big brother. Sounds great to me. :(
 
Quote from Cutten:

If LEH is well-capitalised, liquid, and hence undervalued, wouldn't the board order a stock buyback?

With the stock at $12 and change yesterday, down 75% in 2 months, surely it would create massive shareholder value, and crush the shorts, if they were to just buy back at $15 per share or higher.

Yet they don't take this obvious confidence-boosting, liquidity-proving step. I wonder why that is?
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Cutten, I typiclaly find your comments insightful and I tend to agree with you but on this issue I disagree strongly.

It's too simplistic to say if the stock is "cheap' then Lehman should order a stock buyback. Note that the issue here is liquidity, it makes no sense for any financial service company in this environment, to use critical cash reserves to buy back stock. especially when the competing side (the short sellers) can short the stock infinitely via naked shorting.

I strongly believe in shorting an dteh key role it plays in market stability (when done legally/properly), the issue here is NAKED SHORT SELLING. It's one of the most evil pratices in the markets and incredibly destabilizing for companies and other shareholders.

Finally, any company that trades primarily on confidence and liquidity can be damaged by rumors and shortselling. This is a critical issue here.

The SEC should finally ban NAKED short selling and ensure there are no loopholes where traders can naked short stock via foreign broker dealers, etc.

With such rules in place, companies will then trade legitimately and not be subject to these heinous rumors and manipulation.
 
Quote from piezoe:

I agree with you Failedpoet. While shorting is useful in the markets, a mechanism to make sure it is legitimate needs to be enforced. Naked shorting is another matter altogether, and that has led to serious problems for smaller companies in particular. I haven't seen anyone come out against shorting. It's naked shorting where you can end up with more shares sold short than exist. That's the problem.
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It's funny that in markets which have minimal regulations on shorting, these problems do not exist.

Naked shorters short stocks as if they are futures. Sounds like they are advancing stock trading forward.

It's funny how the "evil" naked shorters only attack garbage companies that are losing money, have bad balance sheets & are failing.
 
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