Financial Crisis & Short-Selling
I am not an expert on financial markets. To the extent I write about stocks and markets, I stick to what I know and understand: technology, products, business, and strategy. However, I have often wondered what good does short-selling bring about as a financial tool.
Well, yesterday, Jim Cramer started ranting on CNBC about how the Hedge Funds and short-sellers have brought AIG and other financial institutions down, and how Chris Cox, SEC Chairman, fell asleep on the wheels. Cramer believes that the SEC should bring back the uptick rule which Cox cancelled. That rule requires a stock to tick up in price before it can be sold short. Cramer, this morning, has even started a rumor of financial terrorism.
And today, it seems, the world has awakened to a broader awareness about short-selling as a problem, as Hedge Funds dig up dirt to crash a stock, which in turn, often crashes companies. New York Attorney General Andrew Cuomo now wants a wide-ranging investigation into short-selling.
I have been asked by Hedge Fund managers if I could become a “source” of bad news for them. Intellectually, I possibly could. But how would I wake up in the morning and look at myself in the mirror if that became my business?
You see, those who are in the business of “building” don’t like this destructive component of the financial market, and it triggers some visceral nauseating reaction in us.
Yet, business schools continue to send their best and brightest students into a profession - Trading - which has nothing to do with building, and most certainly nothing to do with leadership or vision. And Traders use both Long and Short positions to do their job. The whole thing feels like a wastage, although most experts would tell you that short selling does need to remain legal as a “market tool“.
The ever-optimistic entrepreneur in me wants to believe that this crisis will perhaps steer us away from the greed and destructive behavior, and put the focus back on Building. I am not sure, somehow, if the realist in me is as hopeful.
What is wrong with short selling? Betting that a companies value (via stock price) will go lower is no different than betting (often incorrectly) that a stock will go up.
People betting on a comapny going lower via short selling is NOT why companies stock goes lower. Remember, for every short, there is a long who believes the opposite.
Done within reason short-selling is fine, but do you really think spreading rumors and using other unappetizing tactics to drive a stock down is a good thing?
I believe, the crack-down you’re seeing right now in the market is because the regulatory bodies share the same concerns as I do about the destructive nature of short-selling.
Building on your ” Building ” theme - one must assess the situation, out of the box.
Many years ago, my Master told me ” America is the Fortress of the goddess of Wealth “.
The myriad problems the world is facing can only be solved by a truly Spiritual Person. For spiritualism to establish itself, materialism must give way.
Hence the current scenario must be seen in a positive light. Finally, there is light at the end of the tunnel.
To all of us, worried sick to death about the future - relax. Nostradamus has said, there will be 600 to 800 years of Paradise on Earth. It could happen as early as 2012. For more info Google The year 2012.
Short sellers cut through all the boosterism and baloney that starry-eyed entrepreneurs and crooked bankers use to pull the wool over the eyes of the public and swipe the market blind.
Screw “the spiritual.” That’s not going to put food in my kid’s mouths or pay for their educations.
Where’s your profits? Quit lying. Either produce or die, die, die.
Dear jstanley01,
Spiritualism does not mean working the worry beads, and not do any work. The Lord Jesus did suggest that people put aside 10% of their earnings to help the poor. Most religions have this suggestion; only the quantum differs.
For the last several decades, the World has been moving from crisis to crisis. At some point in time, “Peace on Earth and Goodwill to all Mankind” must come. The politicians have had their chances.
I asked my Master,” What is the biggest sin a man can commit?” The Master replied, ” To hurt another human being.”
If my comment has hurt you, my sincerely apologies for it.
Lucifer used to be the light bearer. Past tense. Short sellers are not Lucifer, nor are they his servants.
It is Lucifer who has defamed those who speak the truth. It is Lucifer who has made scapegoats out of the innocent. It is Lucifer who has lied about the short sellers and forced them onto the sidelines.
Why? It’s very simple,really. So that he may introduce himself. Personally.
http://market-ticker.denninger.net/archives/583-Lucifer-Pokes-His-Head-In-The-Tent.html