Breaking: SEC intends to temporarily ban short-selling

[thewiseguy]

Its on the CNBC website. No details yet.

I think this is great news. Much of the recent pain at Wall Street is caused by the short-sellers IMO.

[PDJane]

1. That's true of the big crash, too.

Short sellers exacerbated an iffy situation. The Dems have been trying to ban that practice for years and years and years, and all of a suddent the Republicans pull the solution off? How long do you think that will last? Wouldn't it be wonderful if it lasted until Obama gets elected, and then he could just forget to repeal it?

[Cassandra]

2. UK already did.

[ingac70]

3. Isn't that how you make money in a down market? n/t

[Hassin Bin Sober]

12. You would still be able to buy "puts" for a premium from a seller for the right to sell....

....a stock at a "strike price" should the stock fall below the agreed upon "strike price."

The stock doesn't necessarily change hands unless the stock falls below strike price. There is less impact on the stock price and less risk to the "short" (he is only risking his premium) - if the stock rises in price he just doesn't exercise his option and it becomes worthless.

A "naked short" , on the other hand, borrows the stock from the owner and sells/throws it out in the market. Done in large enough volume, it can affect the stock price negatively - Done sometimes on purpose, by the guys in the black hats, in a sort of a self fulfilling prophecy. It's called a naked short because the short is on the hook for a, theoretically, infinite amount should the stock rise in price before he takes his lumps an covers by buying the stock back at the current higher price and delivering it to the owner...........this can cause what's called a "short squeeze" or an artificial rise in price.

I hope I'm explaining this correctly - it's been a while.

[ingac70]

14. Thanks for the lesson!

:hi:

[nadinbrzezinski]

4. We're following the UK on this

[itsrobert]

5. I heard that's how the Kennedys made their money

Joesph Kennedy was a master at it.

[morgan2]

6. shorting is a very important market tool

no one who owns the stock likes people who short the stock because they're betting against it, but stocks do over inflate.. and without people shorting a stock artificial bubbles would be much more common, there would be very little pressure on a stock to level off.

[mudesi]

7. That will spark a FOOLS RALLY

The second the ban is lifted -the second- there will be a major crash.

This is going to do nothing but inflate the value of stocks beyond what they're "really" worth. Just before the election, too.

Don't buy.

[David__77]

8. Capitalism will surely usher socialism in.

It's funny how survival dictates reining in capitalism - even from the perspective of the capitalists themselves!

[HughMoran]

9. good

fucking stupid practice that is - bet on losing - doh!

[RB TexLa]

10. Crazy

[AlCzervik]

11. short selling is not illegal. Insiders short selling is another matter.

[still_one]

13. I believe it is "uncovered short selling", not normal short selling /nt