PeakOil is You
SEC bans short-selling in US
Re: SEC bans short-selling in US
by cube » Sat 20 Sep 2008, 02:38:23
$this->bbcode_second_pass_quote('threadbear', 'A')ll of you need to get out of the markets. Don't short it, or long it. Just get out. Put half your stash in bullion and keep half in cash. If you feel better keeping your cash in a safety deposit box, do it.
getting out == selling
If everybody is selling then who's buying?
This goes back to my statement of:
1) smart money
2) dumb money
There has to be losers.
I agree, it is better to pull your hand out of this finger trap NOW even if it means losing your fingernails.
Those who fear the pain of a small loss will have to suffer full amputation of their arms without anesthetics later on.
- cube
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Re: SEC bans short-selling in US
by wisconsin_cur » Sat 20 Sep 2008, 06:03:45
$this->bbcode_second_pass_quote('', 'A')fter a week of escalating panic in the markets, stocks soared for the second consecutive day on Friday, and many investors rejoiced. But below the surface, a new sense of turmoil set in. When Washington changed the rules of Wall Street, winners were turned into losers and losers were turned into winners, and both camps were left fearful about what would come next.
...
$this->bbcode_second_pass_quote('', '
')Computers that automatically buy and sell for big investors hit snags because they were not programmed for such a restriction. Securities firms and money managers that routinely sell short to hedge against possible losses wondered how they would cope. In certain stocks and funds traded on New York Stock Exchange, some prices and trades were “erroneous,” a spokesman said.
The surge in financial shares was driven at least in part by traders who were forced to buy those stocks to cover earlier short sales, raising doubts about whether the rally will last.
Hedge fund managers who made vast profits betting against the nation’s financial titans called the ban unfair, and said the move would only prolong the financial crisis. Some traders said they were no longer betting on the intrinsic health of companies, but rather on what the government might do next. Others simply withdrew from the market.
“Some of my clients are literally closing their books and going on their vacation for two weeks — they can’t operate in this environment,” said Meredith A. Whitney, a financial services analyst. “You pack up and come back and play the game when you know what the rules are.”
One hedge fund manager, who declined to be named, likened the changes to “turning a football game into badminton.”
$this->bbcode_second_pass_quote('', 'M')any players warned that the government’s sweeping actions might have unintended consequences. The ban on short selling raised questions about how certain parts of the capital markets would function. Companies may have a harder time raising money by selling instruments like convertible bonds, which can be exchanged for shares, because many investors short stocks to hedge against the risks of owning these instruments.
Byron Wien, chief investment strategist at Pequot Capital Management, the big hedge fund, said that forcing big investors to disclose short positions could create a run on stocks. It might not be immediately apparent whether investors with short positions were using it to hedge another position or bet against stocks.
In the market for options — instruments that give holders the right to buy or sell shares at certain prices — traders reported frantic trading in Chicago and New York. Many big options traders, or market makers, must frequently sell shares short to hedge other trades.
“It was the most difficult day we have ever seen in the market,” said Peter Bottini, an executive vice president at optionsXpress, a brokerage. “We have had a very volatile day.”
William J. Brodsky, the chief executive of the nation’s largest options exchange, Chicago Board Options Exchange, lashed out at the S.E.C. “The need for the policy intervention notwithstanding, it is difficult to comprehend the merits of a draconian measure that will result in the sudden and severe removal of liquidity from the marketplace at the same time that the government is taking unprecedented steps to preserve it,” he said in a statement.
I could cut and past the whole article so I guess I will just refer everyone over to the nytimes as the source.
http://www.thenewfederalistpapers.com
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wisconsin_cur - Light Sweet Crude
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