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In Order To Make The Ponzi Market Keep Going Ever Higher, Barney Frank Tries To Make Shorting Virtually Impossible
As part of the Barney Frank proposed Manager's Amendment, which will accompany HR4173, the "Wall Street Reform and Consumer Protection Act of 2009", are three little-noticed rules that, if adopted, will make shorting stocks if not impossible, then extremely problematic and difficult. It is obvious why these rules would end up in an amendment: the outcry from retail and institutional traders would have been huge had these proposals made the full text of the proper Bill, and into the full view of the Mainstream Media. So why bother with these - simple. As everyone is aware, Ponzi schemes only work when constantly growing, as otherwise they blow up, implode under their own weight, once price discovery is attempted by all. Case in point: when Madoff's securities was unable to find another greater fool in the face of collapsing asset values, the jig was up overnight, and the value of the pyramid went from $50+ billion to $0 instantaneously.
In this manner, Ponzies are like sharks - they need to swim to live: any deviation from the norm threatens their very survival. By comparison, shorting has always been the most traditional way to force price discovery: as idiot money pension funds tend to be long-only, selling only occurs in times when book gains have to be realized, and facilitates a rising market without any natural checks and balances. If this amendment passes, the entire equity market will have become Madoff securities to the dot. It will continue going up, until market values are a reflection of no underlying fundamentals, but simply the latest pension fund long-only dumb terminal willing to throw managed capital into the bonfire of an inevitable future stock market collapse. And, to borrow another page from the Madoff analogy, when the inevitable correction does occur, it would not be 10% or 20%: the entire worth of the Ponzi would be gutted.
What are these rules? We focus on Section 7422, 24 (a) in the attached Manager's Amendment.
The first one states the following:
‘‘(2)(A) Every institutional investment manager that effects a short sale of an equity security shall also file a report on a daily basis with the Commission in such form as the Commission, by rule, may prescribe. Such report shall include, as applicable, the name of the institution, the name of the institutional investment manager and the title, class, CUSIP number, number of shares or principal amount, aggregate fair market value of each security, and any additional information requested by the Commission. For purposes of section 552 of title 5, United States Code, this subparagraph shall be considered a statute described in subsection (b)(3)(B) of such section.
‘‘(B) The Commission shall prescribe rules providing for the public disclosure of the name of the issuer and the title, class, CUSIP number, aggregate amount of the number of short sales of each security, and any additional information determined by the Commission following the end of the reporting period. At a minimum, such public disclosure shall occur every month.’’.
What this means is that just like with 13-F and 13-G filings for long positions, investors over a certain threshold will be forced to provide to the SEC a listing of all their short positions, which in turn will decide whether or not to publicly disclose all the details about any and all indicated short positions. Of course, any such disclosure will make shorting very problematic for managers who up to this point have been able to tout their long-exposure in certain names without disclosing hedged or shorted counterpositions, with the hope that they will be able to short even more names to witless followers who merely replicate given hedge fund portfolios (yes, hedge fund portfolio cloning is nothing new, and hedge funds are all too aware of how to take advantage of gullible trend seekers). Furthermore, this would likely make hedging particularly difficult for a vast array of hedge funds who do not share the administration's, and CNBC's, fervor that all is good in both the economy and the market.The scariest component of this rule is the latitude that the SEC is given in determining broad policy. As is widely realized by now, the SEC is merely a lapdog for the biggest monied interests, and as such will merely end up doing whatever is in the best interest of such firms as Goldman Sachs which have gotten the concept of regulatory capture down to an art.
The second proposed rule is even more peculiar: the SEC will prohibit anything it deems is a "manipulative" short sale, with the definition of said manipulation left entire up to the SEC's intellectually and reputationally (if not financially) challenged executives:
‘‘(d) TRANSACTIONS RELATING TO SHORT SALES OF SECURITIES.—It shall be unlawful for any person, directly or indirectly, by the use of the mails or any means or instrumentality of interstate commerce, or of any facility of any national securities exchange, or for any member of a national securities exchange to effect, alone or with one or more other persons, a manipulative short sale of any security. The Commission shall issue such other rules as are necessary or appropriate to ensure that the appropriate enforcement options and remedies are available for violations of this subsection in the public interest or for the protection of investors.’’.
Just like the anti-terrorist act allowed virtually any citizen to be stripped of his rights with no questions asked, if the powers that be determined he or she posed a terrorist threat, so potentially any short sale will have legal ramifications, if the SEC so decides. For example, Mary Schapiro can come out tomorrow and tell you shorting Citi is now verboten. That's precisely what rule two envisions.
The last rule is the most peculiar, as it will mandate broker-dealers to instruct clients they have the right and ability to refuse to lend out their stock to short-sellers. In a time when it is next to impossible to find borrow in a plethora of financial stocks, this will simply further eliminate the pool of shortable collateral. As a result, look for (or rather don't) an ever increasing number of shares that will hit broker HTB (hard to borrow) lists, which as a result have huge repo rates and/or are simply unavailable.
NOTICES TO CUSTOMERS REGARDING SECURITIES LENDING.—Every registered broker or dealer shall provide notice to its customers that they may elect not to allow their fully paid securities to be used in connection with short sales. If a broker or dealer uses a customer’s securities in connection with short sales, the broker or dealer shall provide notice to its customer that the broker or dealer may receive compensation in connection with lending the customer’s securities. The Commission, by rule, as it deems necessary or appropriate in the public interest and for the protection of investors, may prescribe the form, content, time, and manner of delivery of any notice required under this paragraph.’’
The combination of these three rules, when passed, will make shorting practically impossible within equities, and with CDS demonized beyond compare, virtually all options (except puts, although we are confident Barney Frank will see to that rather shortly as well) to express a bearish bias in securities will be taken away from investors.
And as if that wasn't enough, the SEC is now expected to adopt a modified uptick rule. The proposal for an "alternate uptick rule" would require traders who wish to short, to post offers at least 1 cent above the best bid, with hitting bid through shorting becoming illegal. What is unknown currently is whether this rule would be effected in combination with a "circuit breaker" rule, whereby the alternate uptick would be enforced only if a stock were to drop by 10% or more in a given session.
Whether or not a circuit breaker is adopted, the combination of all these rules will affect numerous algorithms, further making the computer and algo trading bias (the dominant market force over the past 4 months) to the purchasing side.
Again, the motive behind all these changes is all too obvious: with the fate of the administration, consumer confidence, and the US economy itself tied in to every tick of the market, the regulators and lawmakers of the US will do anything to destroy any semblance of an efficient market if it makes price drops more difficult. Of course, any deviations from fair value are always be temporary, and the ultimate collapse, when it does occur, will be that much more violent. However, as we have gotten to a point when every single up day in the market counts so that Obama can boast to a naive TV audience what a great job he has done in any given day courtesy of the Dow being up another few points, it appears nobody really cares about an efficient market any longer.
The irony is that these regulations will likely push out numerous retail and institutional investors away from open exchanges, and force investors to trade either in unregulated dark pools and other ATS or simply move to foreign domiciled exchanges. At the end of the day, should this Manager's Amendment pass, it will mark the true beginning of the end for America's once effective, and relevant, market structure.
Manager's Amendment in full text:
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Speaking of shorting, I shorted a small amount of DTG last week, and had a trade trigger at $27.27 to cover at market. Guess what, the trade trigger hit today and I covered at $27.29. Now, take a look at the high for the day! It's as if someone knew I had a trade trigger open at that precise price. Looks like I'm being bamboozled. Either that, or TD Ameritrade is front running my a**.
I have noticed less favorable listed bid/ask quotes in my TD Ameritrade account than in my Scottrade account when scalping microcap garbage. You could be on to something.
happens just about every day - with both amtd and interactiveBrokers (to a smaller degree i must say)
Yea, TD Ameritrade gives a wild flying fuck about the 300 shares you ended up covering at the offer. they sure got you!
Yeah. Tell that to the guy who wrote a program to scrape $0.004 rounding from every transaction. Who the flying fuck cares about $0.004?
You are one smart cookie.
LMAO.
Ahh, the failure to consider scale.
LMAO.
Ahh, the failure to consider scale.
Daedal,
They won't outlaw shorting because the bankers play the short squeeze over and over, seems like one of the more cost effective tools they have to help "massage" the markets higher.
The high on DTG is $27.50 from Oct 12, 2009 .... maybe a stop just above would be a better
Well, they just need to outlaw it at the most inconvenient time to you, as decided by the master of the SEC lap dog.
It's all good.
Yes, they will outlaw shorting. However, if you are one of the GS/JPM/etc then im sure they'll just look the other direction for them while cracking down on any truly independent investor that does not believe the market price.
Welcome to the markets. This has been going on for years. Just consider yourself lucky you got filled at $27.29 and not $28.
No doubt, I just find it frustratingly amusing. I don't day trade, so day-to-day noise and the forces behind them is not something I pay much attention to. I've been getting stopped out of my shorts for months, this one was absurdly coincidental me thinks -- plus I want to vent.
there are teams of angry men in china willing to screw you out of 100 bucks cause it's a lot of money over there.
Hey, I know off topic, but maybe not completely: you should really try typing in 'illuminati' backwards and add .com
No really. Copy and paste:
itanimulli.com
Joke of the day - it'll blow your mind.
holy crap, how did you even find that out?
http://www.youtube.com/watch?v=KqxQYyvuqS0
Wow!
Ha!
Whois reveals:
Registrant:
John Fenley
1985N 360E
Provo, Utah 84604-1803
United States
Registrant Search: "John Fenley" owns about 110 other domains Email Search:is associated with about 110 domains
Provo, UT is famous! It was featured in Ocean's 11, Punch-Drunk Love, and all those anti-Mormon videos.
This guy is a little bit of a shut-in:
http://maps.google.com/maps?q=1985+N+360+E,+Provo,+Utah,+84604&oe=utf-8&...
It's funny, but I actually know the guy:
http://www.facebook.com/profile.php?id=29006283&ref=search&sid=670835795...
you forgot the most important one of all... Fletch...
that's fucking nuts!
Wow! That is wicked! How DID you find that out...(can you hear the black helicopters?)
HTTP GET Request returns a 301 Permenantly Moved with the location: http://www.nsa.gov [following].
Most browsers will redirect/follow automatically.
A novice webmaster with a domain can do redirect clients to nsa/fbi/etc with an Apache Server given a few minutes.
Nothing to see here. Move along. He digs the NSA bought a domain did a redirect. Easy. Buy any name you want and have it point to whatever you like. I own several dozen that redirect.
What's the whole concern about the big bad government? Remember we are the government. Be concerned by being an upstanding citizen. Don't hide in the corner. Write, inform your friends/family, vote on election day and more importantly with your dollars.
"They" can only take your freedom if you let them.
Have a prosperous day.
If you vote then we can blame you for consenting to be governed by perpetual warmongers. Stop voting. But yes, do try and inform friends/family - if they dare attempt to find the truth.
Tyler,
There are plenty of ways to "skin a short cat". These regulations are toothless, as proven by the amount of naked short-selling that still goes on in the stock market. This is criminal activity that escapes regulators "watchful eye". Importantly, financial engineers will always find ways to short whatever they want.
Exactly. NAKED SHORT SELLING IS THE ROOT OF THE "PROBLEM". They fucked me in Fall '08 when they banned short selling altogether on the financials. THAT WAS PURELY ILLEGAL!!!!!
Overnight my SKF position was cut in half. motherfuckers...
Bad trading on your part. Or bad luck. Or bad broker. But hardly a conspiracy, dude.
Is this merely a prelude to outright capital controls and some form of nationalization of the markets? (Apart from whatever the PPT may be doing.)
Prelude. Once this bill fails to support asset prices, I'm sure the next bill will implement a rule to allow market particpants to sell stock only on upticks.
But if you only allow sales on upticks then the market can only go... oh... I see...:)
A set-up so obvious, even Bill the Cat can understand it!
Which probably guarantees it will happen.
And he didn't even cough up a hair ball in the process.
Ack!!! .... thbbt!!!
http://upload.wikimedia.org/wikipedia/commons/7/7c/Long-haired-cat-hairball.jpg
After that...buys must occur atleast 5 ticks above the last trade. If you must own it...you must pay up for it.
If only Barney Frank could have the courage of Chris Dodd - the soon to be ex-Senator from Countrywide.
It would perhaps help if Chairman Mumbles were likely to get his considerable arse kicked this November - but alas and alack, he represents MA-4 and will so do for as long as he wishes.
Berney Frank is a DISGRACE to capitalism and free markets.
So to were the bailouts started by your NeoCon good americans Bush and Paulson.
they're not my NeoCons. yes Bush and Paulson started bailout nation to benefit the banks, and the rest is history. it's too bad that BarryO turned out to be a total waste of four years.
He's a disgrace to all humanity.
There was nothing noble or courageous about what Dodd did, it was just a bit of self-serving maneuvering designed to protect an out-sized ego. You are right to hope for something similar from that prince of maggots, Frank, however. Would that he head for the exits too. But lest either of them think that resignation will preclude a moment for them in which the sting of a peoples' justice is felt, let them think again. The army of the homeless, the foreclosed upon, the bankrupt and the unemployed is quite capable of extending memory.
I'd be really interested to know who provides the funding for ZeroHedge.com. Tyler, in the interest of transparency would you ever consider providing a ZeroHedge P&L?
P: ad revenue
L: hosting and infrastructure.
Touche. didn't think so.
I guess that answers the DARPA question? Tshirt, store, donate, and sale of data from the harvest have zero results?
I never knew Ty's thought process was so abstract.
All the spacemonkey-interns provide their own personal burial money, too.
Damn bro, can I get to share in those ad revenues, seeing as I am the "most arrogant" poster on ZH? LOL, just kidding, I just want other people to make money and stop listening to those claptraps on CNBC peddling snake oil.
Sheez......only 5 days into the year and I already agree with Leo once. About the money-making that is..... :)
Leo, bro, dude, cous,
Unless I have comprehension issues, you are the sole poster on ZH peddling the same snake oil. To wit, forget fundamentals, like profits, future growth, dividends, etc. and just buy the dips. Why? Because the hedgies, funds, et al are awash with liquidity and are cock-sure there will be a greater fools- Uncle Ben and Cous Timmy have their backs. So just join up; certainly you will be smarter than everyone else and jump off the train JIT.
What could possibly go wrong?
But like I said, perhaps I have comprehension issues. How is your snake oil different from CNBC?
Dude, you need more cow brain...LOL! CNBC wouldn't understand the way I view things in their wildest dreams!!! Bro, do me a favor, go long Treasury futures right before Friday's employment report. Make sure you leverage up to the max! LOL!!! (Rest of you should short bonds/ long stocks ahead of that report).
@Tyler hope you're getting some fringe benefits too *wink*
Leo, I am confident your postings on ZH divert enough traffic to your own blog.
For sure but I am not profiting from it in any way, shape or form. I have no ads and don't intend to place any unless I have to make a living out of blogging, in which case it becomes a job (not as fun).
I just assumed Kolivakis was in it for the solar stock pump-n-dump.
You could title the blog
Leos Pump and Dumporium
AndyC
More likely away, but to each his own said the man as he sucked a boil off his arm ( sheesh, where did that come from ). Better hit the Macallan 18.
Let's hope he hits the MAC 11 immediately after...
I gave them (us) 500k (euros)=2 billion dollars (in 2011) on the 15th of December 2009. Plus i have endowed a further 2 million for the years between 2012 and 2015. Happy?
Nice to see you CB!
These laws are intended to make "naked shorting" more difficult. I have no problem with institutional investors having to prove they have shares before they short them. Although it will slow down profits for those with greater insight (insider information) into various companies, it will help to keep the average Joe's feet out of the proverbial meat grinder. If you have any problems with this stuff, get into the dark pools or something.
F*ck naked shorts...they are the worst financial parasites of all!
Seriously, in this whole clusterfuck it is the naked shorts that are the worst financial parasites?
And whom do you think is responsible for the bulk of the naked short selling?
So if they were skiers, skiing would be responsible? Why not just have the balls to name names instead of blaming nekkid shorting? Let me give you a hint...85 Broad? GS? OK, I'm gonna stop now before the man behind the curtain (LB) bans my IP address. Oh wait, that's Denninger's MO. The man behind the curtain will merely have me offed. I will still be able to log on. LOL.
This is what the markets are. That's why so many of us have pulled so much liquidity. I'm not gonna change the rules and I've been corn-cobbed enough times now to realize that Barney Fudgepacker doesn't give a shit about my best interestd\s. If you wanna believe that, Leo, be my guest.
People named anonymous have no right to smack.
Keep in mind anonymous, this is coming from a clown named curby.
Thanks for you posting anonymous. Keep up the good work.
I don't know if you can qualify them as 'worst', for that is reserved for central bankers. I do agree with your conclusion on naked shorts. They mess with the float of shares that doesn't actually exist, which manipulates a market and makes it unfair. I concur.
What I don't understand is how you can bash naked shorting and extol central bankers? The 2 are based on the same underlying premise; to cheat someone else in order to fulfill their own goals. The difference is naked shorters are on a far smaller scale than the scale of 'naked' money printing Bernanke is involved in.
Say what? Support Bubble Ben who has shown his hand or other central bankers? Not at all, I know their intentions: try to create asset inflation and hopefully it will spill into real inflation so they can inflate the debt problem away. I wish them luck on that.
Leo, I present to you; The Madoff Exception
CB,
Excellent, I always knew Bernie was a scumbag billionaire.
That infiltration by Madoff of the SEC under the guise of "community service" is one of the sickest jokes I have ever seen. It certainly gives new meaning to the phrase "fox in the hen house."
Also, it is rumored that Madoff claimed he was next in line to head the SEC only a couple weeks before he went down. He apparently spent a lot of time there>>>something about keeping your enemies close?
Bernie also had a daughter-in-law working for SEC. Only way to get any closer to the inside is to have the Missus employed there too.
Actually, naked short selling is only fair when the long side has virtually infinite leverage.
everyone trying to game the system in all ways.. but if you just thought for a moment and realized "hey, Brazil is getting the Olympics, hmmmm" and then you would of doubled your money and not day trade even one second..
I had a short covered last week involuntarily because "the broker dealer could not locate any shares."
I'm all for short selling as it makes a market more transparent and provides for better price discovery. However illegal naked short selling is a huge problem, evidenced in the sec (FTD)failure to deliver list. Hedge funds/ all the big banks should not be able to intentially cause a FTD that is counterfitting. the market makers should be allowed to provide liquidity in a stock but when they intentionally cause a FTD, Their must be consequences. I contend that Bernie madoff made a huge amount of money illegally naked shorting stocks through his firm. Bernie madoff even had a rule named after him the madoff exemption rule after the SEC was threatning to get tougher on market makers intentionally causing a FTD. look at overstock, taser, eagletech...counterfitting is fraud and illegal naked shorting is not the same as legally shorting a stock.
direction - make selling illegal altogether
Tell me again why shorting is anymore dangerous/risky/unAmerican than buying? Especially the manipulative buying/pamp-and-dump?
Barney Rubble Frank, "All your shorts belong to us"...
I think he only requested the "male's shorts"
Your soul may belong to Jesus, but your ass belongs to me! mmm!
Yeah short selling provides a floor....let's pull the floor out!
I don't know who the gang had in charge of gunning the SPY today until this time (3:17pm)... but the guy should get a prize for having accomplished the most obvious and overt manipulation in a couple of months.
fwiw, i've always thought it was insane, that you can own long, and you're broker can sell your shares short
my guess, is somehow, someways, someone explained that one to them..........
Frank exclaims, "you mean, my ira shares in xyz have been loaned out to the shorts"
person, "yes, barn, don't you read!!!"
I've always thought it was insane that people could know so much about finance and yet have a 3rd grade grasp of the english language.
Since "teh authoritays" have decided 'mericans can only buy and hold, I'm going to BUY PHYSICAL GOLD (bitches) AND HOLD IT.
F-U Frank. F-U SEC.
this will be another classic case of the law of unintended consequences, as people pile on alongside publicly disclosed short positions of big name hedgies.
Shorting is a way for Exchange Members to make money, not the public. So, whatever restrictions that are enacted will have an exemption for Specialists and Market Makers.
Why can't Barney be more like Dodd?
bc Dodd was a crony of HFT / Stamford while Barney is beholden to the waves of social mood. period. ahhh, the Pyrrhic trip over the Rubicon and our collectively ensuing fall ... WILL be epic. will do a workup on the VIX, about what it really is and why it will be crossing into all-time-record territory in due time (read: much sooner than anyone thinks) by this weekend once Fibo returns from vaca.
LOL
We finally got rid of Dodd. How do we get rid of B Frank before he does anymore damage?
YET again, Tyler nails the living shit out of the issue du jour.
thank you, sir. The MUST READ of the week.
good thing that those 30% annualized vig spreads that broker-dealers / trustee holders earn don't matter to their bottom line. oh, they do? billions? really? ... well i'm sure barney fief et cet thought that through very well.
Goddammit Durden !!!! This stuff will make you the first "anonymous" winner of the Pulitzer Prize.
Or get him (them) disappeared real quick like.
What do you expect from a Sodomite in Sodom? Victory? This is the prophetic strong delusion of the New World Order, it is homogeneous (pun intended) with the principle of corruption and can't sustain any claim of dominion but by that which has cause and foundation. The inversion is well defined by ZH, taking the shorts down in this case is an act of rape via legislative perversion. What is getting violated is obvious, just ask the laborer of the harvest if there shall be provision enough for the future.
Three polys need to go ....
Dodd.....Frank....Pelosi
Dodd already got the message....
There are very few humans in existance that
have caused the financial damages to the degree
that these individuals have....
In China....they would have been ousted many moons ago....
if by ousted you mean shot in the back of the head or hanged .... then yes ... they would ...
....or suicided
Only 3?!?
yeah, so make money shorting faz for now.
We can all come together and unload our stock portfolios and bank accounts and force price discovery on these gangsters. Start from zero except with the absense of the FED. Unleash a internet blitz with the truth. Set a date for the entire week of the last week of the quarter. Hank Paulson could really looks at finance like a football game, with 4 quarters. Getting off point. So if the scheme fails the people can always put their money back in the market. With the concept of deleveraging I think we could have an impact . I am ready to dedicate all my time to the cause of promoting this new method of price discover since our gov seems challenged. But I need a corporate sponser. What do you say TD? Patrick the Painter
You can't win. You will be declared an enemy combatant and tortured for blatant market manipulation.
Dont think these rules have much teeth. A simple matter of reporting positions really. Also, most stock is borrowed from other institutions not individual investors, so I dont really care if individuals with 500 shares of IBM say I cant borrow them. Tell me when the big boys stop playing and I might be concerned.
Re upticks, trading was awesome back when they were required, and has been fine since removed.
As always, gotta just adapt. The real concern, although still not that likely, is the transaction tax. That would hurt the industry WAY more than these proposed changes.
How do we know that TD isn't a front set up GS put in place to distract us with the micro daily dealings at GS and avoiding real macro issues like the Club of Rome? I think it's pretty obvious banked are conspiring. GS was volunteered to be the punching bag. It helps keep the focus of the idea that many banks are involved. With everything we hate GS for on a daily basis are we really going to care after we discover that the idea behind the Club of Rome is true.
Sadly, I am becoming just this paranoid. Those who have been burned too many times trust no one. One is reminded of Ahmed Chalabi: tell them what they want to hear and who knows where you might end up...
so the cost of put options would go up, and that implies higher volatility? Volatility is a measure of pricing risk, and the method of pricing risk is higher interest rates, libor rates, etc? Although currently risk assessment is 9 on the bankers scale of 10, and yet rates are zero. Does Frank assume that disparity goes on indefinitely? The essence of short selling is that it involves third party risk, and it really matters almost nothing if you can borrow the stock, if there is someone on the other side of the trade? I don't know what a stock should be, in Frank's mind, perhaps a coupon on the future earnings of a company whose viability is insured by the US government? Seems to me short and hold makes more sense, if you look at the stock market index from 20 years ago, a lot of them have disappeared. But that's what they call progress.
I have exactly ZERO dollars invested in the PIECE OF SHIT entirely worthless US stock market (except a few gold mining stocks). I don't even trade the thing anymore just on principle. Die - stocks - DIE!
So your admitting that your version of ZERO is greater than 0.
Nice to see that you have redefined the baseline.
He could still be right depending on how those mining stocks perform...
"You can't give the government the power to do good without also giving it the power to do bad - in fact, to do anything it wants. It is not so much the abuse of power which is a concern. It is the power to abuse’ ...Harry Browne
"shorting has always been the most traditional way to force price discovery..."
Yeah, right. Anyone with eyes can see that there's plenty of manipulation going on in the markets these days with regards to shorting. And everyone knows that hedgies love to beat up on particular stocks in order to "shake out" the retail investors...and then proceed to load up on those very same shares on the cheap. Is this "price discovery"? Do these hedge-fund geniuses just happen to know what the "right" price should be...at any given point in time. Of course not. It's just a game that the big-money boys play to their advantage...no doubt there main goal is to simply steal those shares from small-money players (like myself) by instilling fear (of loss) and anxiety. Thankfully, I haven't been "scared out" of too much in the past year or so (up 13% since Dec 2007)...in fact, I've taken advantage of it more than a few times when valuations have gotten ridiculously low. But that doesn't mean that their games haven't caused me a lot of frustration and anxiety with respect to some of my long-term holdings. Yes, there's a cost to their market manipulation...and frankly, I'm sick of it.
Also, with so much technical-based trading going on these days, I doubt that there's much real "price discovery" (i.e. based on intrinsic value) going on these days anyways. The m.o. of most short-sellers seems to be: look for weakness on the charts, sell a boatload into any strength, get out with your scalp-trade profits and move on to the next victim.
The idea that what we have now is an "efficient market" is laughable.
I couldn't care less if they decided to ban short-selling altogether. What difference would it make? After all, if you think a particular stock is overvalued, you're always free to sit on the sidelines (or sell any shares that you might own). The idea that short-sellers are providing some sort of "service" to the market (by somehow magically exposing the "true" price of a security) is nonsense.
"shorting has always been the most traditional way to force price discovery..."
Yeah, right. Anyone with eyes can see that there's plenty of manipulation going on in the markets these days with regards to shorting. And everyone knows that hedgies love to beat up on particular stocks in order to "shake out" the retail investors...and then proceed to load up on those very same shares on the cheap. Is this "price discovery"? Do these hedge-fund geniuses just happen to know what the "right" price should be...at any given point in time. Of course not. It's just a game that the big-money boys play to their advantage...no doubt there main goal is to simply steal those shares from small-money players (like myself) by instilling fear (of loss) and anxiety. Thankfully, I haven't been "scared out" of too much in the past year or so (up 13% since Dec 2007)...in fact, I've taken advantage of it more than a few times when valuations have gotten ridiculously low. But that doesn't mean that their games haven't caused me a lot of frustration and anxiety with respect to some of my long-term holdings. Yes, there's a cost to their market manipulation...and frankly, I'm sick of it.
Also, with so much technical-based trading going on these days, I doubt that there's much real "price discovery" (i.e. based on intrinsic value) going on these days anyways. The m.o. of most short-sellers seems to be: look for weakness on the charts, sell a boatload into any strength, get out with your scalp-trade profits and move on to the next victim.
The idea that what we have now is an "efficient market" is laughable.
I couldn't care less if they decided to ban short-selling altogether. What difference would it make? After all, if you think a particular stock is overvalued, you're always free to sit on the sidelines (or sell any shares that you might own). The idea that short-sellers are providing some sort of "service" to the market (by somehow magically exposing the "true" price of a security) is nonsense.
well said
So what happens to short ETF's (ie. SKF)? I got rolled months ago when DB redeemed DXO.
Shouldn't the SEC be investigating the naked variety? Anyway this will only drive liquidity away from the market and set up for more volatile swings.
Nothing says "God Bless America" like shorting the market. Well, maybe bootlegging, too. Just ask Joe Kennedy!
I think there are a few items that I will highlight that should enlighten, I have a grasp of the big picture:
Been noticing the open spots on grocery shelves here in Iowa. Don't know if it's the weather. Stuff like Sara Lee going from 10 products to 3. Spring will tell.
First Sara Lee, next..... toilet paper. Don't wait for the tp shelf to go bare. Take my advise and stock up.
Short everything except toilet paper and whiskey.
"Remember the Fed is the banks and the banks is the Fed - they are and always will act in the banks best interest."
That's it in a nutshell. Nice post A.N.
WTC gold was trucked out weeks before 9/11 to make room for explosives
Just my opinion, but I think you are full of it. Haven't brokerages always used customer accounts to make money? It doesn't matter anyway. One way or another, we are all screwed.
If you mean full of truth, thank you for your emotional comment. It does matter and life has meaning, the crooks want you to give up and be apathetic so they can continue to pick your pockets.
You in fact could be one of those crooks encouraging inaction. And by the way, it looks like we will all have a happy ending if your forecast is accurate.
+1
That's the next step, I believe.
Or physical deliveries cannot be met.
Or food riots commence - it'll start when the baby formula runs out.
"Just like the anti-terrorist act allowed virtually any citizen to be stripped of his rights with no questions asked,..."
The anti-terrorist act simply cloned the "war on drugs" (sic) that is a war on Americans and rights. One "anonymous" tip, phoned in by a police officer results in no-knock midnight raids and confiscation of property without due process guaranteed under the US Fourth amendment.
First they can for the nonviolent drug users, and I was not a nonviolent drug user, so I did not object. Then they came for the suspected terrorists, and I was not a suspected terrorist, so I did not object. Now they are coming for the short sellers....
I don't think America can exist in a vacuum or that implementation of such schemes will not go without a hitch.
Of course,either this or hyperinflation. the whole purpose of QE was to give shorters a lesson. My theory is this:While the big players short in tandem(ie with GS permission),,the market keepers lost control of the market last year due to a lot of small time (and big time traders) jumping on the short ETFs. Therefore the SEC has to come up with something to stop that from reoccuring(or else BB has to continue pumping liquidity in the market into infinity).And while I missed the rally mainly due to concern about naked short selling,I find some of the rules reasonable. In fact few times I wrote on googles blogs about the legality of lending shares if they are fully paid for. I posted here once a question I believe to TD whether mutual funds (like fidelity)do in fact lend shares from there retirement funds inventory,and the legality of such lending if in fact big mutual fund and shares custodians practice that. So while they collect interest,and get back in the market to sweep those beaten down shares,a small investor find him/herself wiped out. However I have also called for an even play field in regard to margin for example(you get 2x in short,but you ge more than that in long,and you get 4x for day trade with certain brokers).So I find some of the other rules as very subjective,and hence are not any help. Bottom line:short and long has to be exactly on equal footing for a fair market. And in order not to create a bubble,margin has to be completely eliminated.But the problem is :who is tthe enforcer?with those rules,most probably small time investors would be denied the ability to short,while GS (through Cramer's and buddies hedgies) can keep on targeting the companies who dare to defy their sales pitch. Perfect
Luckily for me, I've pretty much left the "investment" markets. I have a small amount of investment funds with which I've shorted everything. Screw Barney. (figuratively) I've coverted the bulk of my available "funds" to toilet paper and whiskey, which I expect will be the new currency. Good luck to all when financial system breaks. Me.... I'll be in my bunker with my tp and whiskey. Stop by if you'd like for a drink.
Short everything except toilet paper and whiskey.
Short sell short selling.
i dunno,
while i dispise mr. frank and everything he and his compadres stand for...
<flame_shorts_on>
This looks like a call for basic transparency in shorting to me. If you read it as responses to some of the very complaints we read here at ZH all the time, it sounds far less sinister:
- everyone has to register their shorts with a central authority
- everyone has to tell clients that they're using client shares for shorts (i thought clients had to release before you did that anyway)
Even if published a month (or six) after the fact, I would love to have access to who's doing what and when. Those that know they'll be 'seen' may adjust their behaviors accordingly (insiders would have recorded activity, etc.). I would think mr. butler of silver fame would love to see who's got all those shorts on silver, etc.
<flame_shorts_off>
it does make me nervous that the information's ultimate uses are not explcitly limited in the legislation. sounds like room for more insider advantages, and i certainly don't trust anyone out there these days.
like i said, i dunno.