Bets Against Stocks Rise to Highest Level in Years

[RandySF]

“Short sellers have revived their wagers against the stock market in recent weeks, taking their most aggressive positions in years,” the Wall Street Journal reports.





https://politicalwire.com/2020/04/19/bets-against-stocks-rise-to-highest-level-in-years/

[Miguelito Loveless]

1. Yet another reason short-selling should be illegal

[kurtcagle]

2. Why?

The stock market is basically rigged to go up. There are no fail-safes for when the market goes up 1500 points, but if it drops that much, it triggers three pauses in trading, usually offering a window to either inject liquidity or get CNBC or other stock whores to push a rumor in to staunch the bleeding. Short-sellers are no more ethical, but they usually are more likely to call dubious stock market rises manipulated than bulls are.

[Miguelito Loveless]

7. Short selling thrives on fraud

It is an opportunity to destroy a company simply on lies, and make money doing it.

[jimfields33]

3. Forgot your sarc tag

[Recursion]

4. What? That's a horrible idea.

Why on earth would you want that? It would literally mean that if you sell a stock you'd never be allowed to buy that same stock again.

[Miguelito Loveless]

6. What?

Short selling means BORROWING stocks, selling them, then hopefully buying them back later at a lower price. You are skipping the first part of the short sale.

[Recursion]

9. That is not what short selling means

Short selling is selling something now and buying it back later. That's all.

[Miguelito Loveless]

10. Ummm, no.

What is Short Selling?

In short selling, a position is opened by borrowing shares of a stock or other asset that the investor believes will decrease in value by a set future date—the expiration date. The investor then sells these borrowed shares to buyers willing to pay the market price. Before the borrowed shares must be returned, the trader is betting that the price will continue to decline and they can purchase them at a lower cost. The risk of loss on a short sale is theoretically unlimited since the price of any asset can climb to infinity.

https://www.investopedia.com/terms/s/shortselling.asp

[Recursion]

11. That's a naked short

Shorts can be naked or not.

But, anyways, you still haven't explained why I can't borrow money to buy a stock and then sell it.

[Miguelito Loveless]

12. Again, that is the definition of short selling

in every financial forum I have ever run across. Buying a stock with borrowed money is called going into debt to buy stocks. Shorting a stock is borrowing shares you, selling them, then buying them back at (hopefully) a lower price and pocketing the difference. If you borrow money from your broker, backed by stocks you own, to buy stocks and then selling them is called "buying on margin".

These are all pretty much day trading "strategies", and pretty stupid. While some may not need to be banned outright, they should be SEVERELY taxed (90%) since they conrtribute to market volatility and fraud.

[Recursion]

13. Yeah, you need some better financial forums then.

Start here:

https://www.investopedia.com/terms/s/short.asp

A short position is one in which you are selling with the intention of re-buying at a lower price. That's really all it is: you think something you own is overpriced and will fall, so you want to take that profit now.

[Miguelito Loveless]

15. My definition comes from the source you cite

the difference is, you are referring to the definition of "short position" and I am referring to the definition of "short selling".

I LITERALLY link to the same source, but the correct definition of the term referred to in my post. I said in my post that "short selling" should be illegal, not holding a "short position".

Words have meaning.

[Miguelito Loveless]

17. Other sources:

There are a number of ways of achieving a short position. The most fundamental method is so-called "physical" short-selling, which involves borrowing assets (often securities such as shares or bonds) and selling them.

https://en.wikipedia.org/wiki/Short_(finance)

Shorting a stock involves borrowing shares from someone who owns the stock you want to sell short. Once you borrow the shares, you then sell them on the open market, getting cash from whoever buys the shares from you. At some point in the future, you'll buy back the stock and then return the shares to the investor from whom you borrowed them.

https://www.fool.com/investing/how-to-short-a-stock.aspx

Shorting, or short-selling, is when an investor borrows shares and immediately sells them, hoping he or she can scoop them up later at a lower price, return them to the lender and pocket the difference.

https://www.marketwatch.com/story/why-you-should-never-short-sell-stocks-2015-11-19

What Does it Mean to Short a Stock?

When an investor goes long on a stock, she buys it with the belief that it is going to increase in value over time. Going short, on the other hand, is what some investors do when they believe the stock is about to decrease and think they can take advantage of that. In short selling a stock, the investor doesn't actually own it.

https://www.thestreet.com/investing/shorting-a-stock-14688016

A short sale is the sale of a stock that an investor does not own or a sale which is consummated by the delivery of a stock borrowed by, or for the account of, the investor.

https://www.investor.gov/introduction-investing/investing-basics/how-stock-markets-work/stock-purchases-and-sales-long-and

This strategy is called “short selling.” It is achieved by selling borrowed stock at today’s share price, purchasing the shares in the future when, as hoped, its price dips and pocketing the difference.


https://www.schwab.com/resource-center/insights/content/what-is-short-selling

[TeamPooka]

5. They may be right. Things are going to take a while to get back to the frothy bubble

we had before

[Amishman]

8. Its just as frothy now given the economic reality

There is a lot of pain to come, things have come unglued so fast that it hasn't sunk in yet.

There are going to be lots of bankruptcies coming. The revenue to pay the existing debts never occurred. The delinquency clock just hasn't run out yet.

[uponit7771]

14. Former FDA Commissioner Scott Gottlieb; Widespread testing not until September

... that's how long this is going to take.

These guys are willing to risk another uptick

[Calculating]

16. It's ridiculous

I'm half tempted to short certain stocks myself. The Nasdaq is like 10% off from the all time highs and would be overvalued even without the pandemic.