Why is short selling bad, either naked or smartly dressed?

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Mark R

Diamond Member
Oct 9, 1999
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Originally posted by: Thump553
Wouldn't FTDs trigger off a short squeeze? (short sellers pushing price up when they buy to cover) Or are you saying that the FTDs never get filled?
The party responsible for the FTDs does have to fill them within a certain time period.

Either they find stock for loan, or they buy stock. If they don't, the broker receiving the FTDs can buy the stock and send the bill on.

Theoretically they can cause a short squeeze, if the brokers are buying to cover - but not if they're borrowing to cover.
 

senseamp

Lifer
Feb 5, 2006
35,502
5,580
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Absolutely nothing is wrong with short selling, except that it interferes with our planned economy where the government wants to dictate what the prices of financial stocks should be. This is same as USSR, where "speculation" was outlawed because the government did not want people selling products for higher price than what central authorities have planned. Of course the end result of such government intervention is always a broken market.
 

Thump553

Lifer
Jun 2, 2000
12,210
1,683
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Originally posted by: senseamp
Absolutely nothing is wrong with short selling, except that it interferes with our planned economy where the government wants to dictate what the prices of financial stocks should be. This is same as USSR, where "speculation" was outlawed because the government did not want people selling products for higher price than what central authorities have planned. Of course the end result of such government intervention is always a broken market.
Useless political posturing. You didn't even bother to read or dispute to the information contained in the previous posts in this thread-or you don't understand them.
 

Kuragami

Member
Jun 20, 2008
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FTDs are only supposed to be around for a few days as mentioned before and yeah you and I can't really take advantage of them. Currently it's estimated that there is over a billion FTDs in circulation. The SEC has not been enforcing the rules regarding FTDs and there is some fear that looking at the books of certain major firms that failed may cause a systemic failure. It's all well and good if the books match up and you actually have the stock to fulfill the FTDs but if they been trading them as stock then, depending on how hard they been gaming the system, they might find hundreds of millions of FTDs that simply can't be fulfilled.

Also FTDs aren't only caused by naked shorting although that's how it's used by the major firms. The whole reason for FTDs was to cover the instances where you sold a stock you thought you had but didn't or there was an error with the system or paperwork. As mentioned before it's essentially to grease the wheels of trading.

Well the major firms that own everybody and everything else decided to take that grease and lube up the common traders and consumers alike. It looks like they might run out of lube and it's going to hurt us a heck of a lot more than it will them.

I keep hearing the term "Brave New World" over and over in MSM financial articles and I think it's with good reason. I still think they might decide to crash PMs one last time before the Heavens open up if you will. I don't have much money to invest in PMs but I'm scraping together what I can. I think all anyone can do as a small investor is watch and wait. The only question is Gold or Silver.
 

senseamp

Lifer
Feb 5, 2006
35,502
5,580
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Originally posted by: Thump553
Originally posted by: senseamp
Absolutely nothing is wrong with short selling, except that it interferes with our planned economy where the government wants to dictate what the prices of financial stocks should be. This is same as USSR, where "speculation" was outlawed because the government did not want people selling products for higher price than what central authorities have planned. Of course the end result of such government intervention is always a broken market.
Useless political posturing. You didn't even bother to read or dispute to the information contained in the previous posts in this thread-or you don't understand them.
Because there is no there there. If people want to borrow stock and sell it, there is NOTHING wrong with it. Period.
 

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