Shouldn’t this be ‘naked’ short selling? Which has been illegal for 75 years, but nonetheless just as destructive.
Yes and no, because naked short selling is alive and well, and a real part of the mess that happened on Wall Street. However, short selling has become so aggressive that it’s a game to see how far they can push it. The Uptick Rule was removed and it gives an advantage to short sellers, IMHO.
It is all about winning now, and if they can drive the stock down by betting against it, and totally destroy the company they will...there are so many of these people it’s like being in a sea of perona’s.
Short selling is a very destructive process and should not be legal. There is no good description of it in common knowledge which makes any sense. No investor in his right mind would “lend” his stock to be sold short since it directly contradicts his financial interest by expanding the supply of stock in the market. Anyone wishing to bet against the stock can simply sell calls or buy puts.
Fraud is at the bottom of this. Brokers allow stock held in margin accounts to be used by short sellers for a fee. Most of those with margin accounts are not aware of this. Brokers profit, speculators may profit and stock owners get screwed.
The CAPM system also shares a lot of the blame, as dividing up those mortgages into so many sellable pieces until they are dumped into Tranches did a lot of the damage too...it was a combination of factors.
Sholes and Black created CAPM equation system, and one of them got a Nobel Peace Prize for it and other one got zilch, and then after the crash one of the Professors (on FoxNews Special) said that had been tried three different times and it did not work.
“Short Selling” is selling stock you’ve borrowed.
I think “Naked Short Selling” is selling stock you haven’t even borrowed, and which you thus then cannot deliver to the buyer. Some folks apparently manage to get away with it.
When the government wants something of yours, they seem to find a law. When their friends want to do something bad, they can never find a law...
How is it destructive? And it makes the short squeezes twice as fun : ) Naked shorts are incredibly dangerous.
>>Shouldn’t this be ‘naked’ short selling?<<
Beat me to the question. There is a HUGE difference between shorts and naked shorts.