Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 8
This is a disaster. A political solution -- raw meat for the masses -- to something that demands a financial one, or at least an enforcement one. Banning shorting on a large tranche of securities inhibits the price discovery mechanism in the stock market.

I have no doubt that there has been abusive short selling of financials, but the SEC already has laws on the books that it could (but does not) enforce. Further, it would be extremely easy to return the uptick rule, which would make it much harder to short shares serially.

One of the reasons that the Chinese market rose so high and then blew up is the fact that it is long-only. Price discovery is prevented. Shorting is very, very important to a healthy market.

It must be remembered that this financial crisis was not caused by short sellers. It is caused by the banking institutions themselves taking on insane levels of leveraged risk by buying hundreds of billions of poorly understood risk instruments.

The sound you hear right now is dozens of hedge funds blowing up since they can no longer hedge against a huge portion of our market. What happens when they have to sell?

Bill Mann
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.