Short selling-UW prof quoted
Comments
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Maybe this is just four 10% stouts talking (found the % key on the sixth try...), but I still don't understand the necessity of short sellers. You buy a stock because you think a company will do well. That company doesn't do well, so you (and, presumably, everyone else) tries to sell. This increase in availability of stock makes the price shoot down. As it should, as this company isn't doing well. So what's the problem?
When the company is doing well, people want the stock, and so the price increases. When the company is doing poorly, everyone's trying to sell the stock, so the price decreases. Simple. Perfect. -
My limited experience w/ short sellers is the same as the author. More often than not, they have thoroughly done their homework, and when they present their results, it doesn't take alot or reading to see there is trouble in paradise for the company they have targeted.
The research they do absolutely has a place in the market, less sure on overall value they bring to efficiency of market.
One thing I love about the Finance board is how many smart people we have and like the old adage "you learn much more with your mouth shut and ears open, I am going to defer to Dawgscandance.
Why I hope as time goes on we get more discussion on stock specific ideas and why/why not they may be buys/sells
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This is why MOST of us are here. We come to the Finance board to hone our financial acumen and have frank and thoughtful discussions.creepycoug said:
Great explanation.DawgsCanDance said:Yes... the limitation for short selling now is the lack of availability of stock to be loaned on a massive scale.
The back story is that In order for a stock to be "lendable" according to the "rules", the stock needs to be held in a margin account. If the rules were changed to all stocks issued that are held in brokerage accounts were automatically classified as being marginable, the availability of stock to borrow and therefore be able to short without the fear of a short squeeze [until short sellers have sold the total number of outstanding shares] would materially improve the liquidity of the market.
This get into the question of how many angels dance on the head of a pin... changing the rules regarding the easy availability of shortable stock might materially change the "built in" inherent bias of the upward trajectory of the markets over time however so regulators prefer the "juiced ball" approach currently in place in support of upward movement.
We joke around a lot, but this is the kind of top drawer insight you can’t get in the Tug.
@RaceBannon @DerekJohnson
Posters go to the Tug for political discussions or rants. Or discuss why its so great to be part of their cult (blue or red).
We go to the Husky Football Board for UW updates and Malarkey.
You have done an awesome job keeping this board focused (and kept the hate and malarkey away).
Today seems to be slipping a notch toward political hate and Malarkey.
Please to be refocusing the focus of those who are now unfocused.
Thank you.
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Stay the fuck out of the tug. You add nothingEwaDawg said:
This is why MOST of us are here. We come to the Finance board to hone our financial acumen and have frank and thoughtful discussions.creepycoug said:
Great explanation.DawgsCanDance said:Yes... the limitation for short selling now is the lack of availability of stock to be loaned on a massive scale.
The back story is that In order for a stock to be "lendable" according to the "rules", the stock needs to be held in a margin account. If the rules were changed to all stocks issued that are held in brokerage accounts were automatically classified as being marginable, the availability of stock to borrow and therefore be able to short without the fear of a short squeeze [until short sellers have sold the total number of outstanding shares] would materially improve the liquidity of the market.
This get into the question of how many angels dance on the head of a pin... changing the rules regarding the easy availability of shortable stock might materially change the "built in" inherent bias of the upward trajectory of the markets over time however so regulators prefer the "juiced ball" approach currently in place in support of upward movement.
We joke around a lot, but this is the kind of top drawer insight you can’t get in the Tug.
@RaceBannon @DerekJohnson
Posters go to the Tug for political discussions or rants. Or discuss why its so great to be part of their cult (blue or red).
We go to the Husky Football Board for UW updates and Malarkey.
You have done an awesome job keeping this board focused (and kept the hate and malarkey away).
Today seems to be slipping a notch toward political hate and Malarkey.
Please to be refocusing the focus of those who are now unfocused.
Thank you. -
WHAT!?EwaDawg said:
This is why MOST of us are here. We come to the Finance board to hone our financial acumen and have frank and thoughtful discussions.creepycoug said:
Great explanation.DawgsCanDance said:Yes... the limitation for short selling now is the lack of availability of stock to be loaned on a massive scale.
The back story is that In order for a stock to be "lendable" according to the "rules", the stock needs to be held in a margin account. If the rules were changed to all stocks issued that are held in brokerage accounts were automatically classified as being marginable, the availability of stock to borrow and therefore be able to short without the fear of a short squeeze [until short sellers have sold the total number of outstanding shares] would materially improve the liquidity of the market.
This get into the question of how many angels dance on the head of a pin... changing the rules regarding the easy availability of shortable stock might materially change the "built in" inherent bias of the upward trajectory of the markets over time however so regulators prefer the "juiced ball" approach currently in place in support of upward movement.
We joke around a lot, but this is the kind of top drawer insight you can’t get in the Tug.
@RaceBannon @DerekJohnson
Posters go to the Tug for political discussions or rants. Or discuss why its so great to be part of their cult (blue or red).
We go to the Husky Football Board for UW updates and Malarkey.
You have done an awesome job keeping this board focused (and kept the hate and malarkey away).
Today seems to be slipping a notch toward political hate and Malarkey.
Please to be refocusing the focus of those who are now unfocused.
Thank you.
I didn't know UW updates were a thing! Where do I find these? Links?
Can't tell if insult or compliment...RaceBannon said:Stay the fuck out of the tug. You add nothing
