Feds are now blaiming us as traders for the Markets tanking

[Adam Brooks]

The SEC, starting Thursday, will be putting more restrictions on short selling in the markets. Short selling is when we sell a stock before we actually buy it in a bet that it will go down in price. Its a bet against the stock price going up.

Fannie and Freddie were ran for crap and in bad debt up to their eyeballs. we bet they would drop, were right, wand made money from it. the SEC stepped in and prevented us from doing so for a few weeks...... their price still went down even further and then the feds took control.

We're again being blaimed for LEH being ran for shit and going out of business, hence the increase restrictions again (they're not going to work yet again to protect these failing companies).

The average American doesn't really know why the markets are going down but would sure as hell like to know why their retirement is dwindling. Here is a great article from Bloomberg that explains whats going on and why short sellers dont have anything to do with it as the media and SEC would like us to think

http://www.bloomberg.com/apps/news?pid=20601039&sid=aFYdFp975oCA&refer=columnist_lewis

[badass88gt]

You should be posting this in the politics forum.

[lordairgtar]

It's not politics, it's finance.

[badass88gt]

All I read was the Feds are blaming us. I didnt read anything past that, I ass-u-me'd it was politics. My bad.

[Adam Brooks]

its no prob

i found this, enjoy the irony
9VvGW98D3XA

[Adam Brooks]

http://www.youtube.com/watch?v=txDWRR5WRFQ

watch the two dudes in back LOL. at least there's some humor in a horrible situation

[Karps TA]

Thats Sal and Richard from the Howard Stern Show.

[Chalky]

Either find a guilty party or find a scapegoat. In government, either will do!

[Prince Valiant]

I'm blaming you!!!!

Short selling is un-americaaaan!!!! They should get an angry mob with torches of fire and a noose out your door!!!

Who's with me?!?!?

*THIS SUCKS>>>IT WORKED BETTER IN ALL CAPS AS I TYPED IT!!!

[Syclone0044]

Are the restrictions for short selling (which anybody can do), or NAKED short selling which seems to be a lot more profitable and only brokers or other people with cronys, can do?? Why can't the general public do naked short selling? Something STINKS.

[Adam Brooks]

the restrictions are preventing naked short selling which the general public can do actually :) The potential profit w/ naked short can certainly be much larger as you mentioned.... but the loss can be enormous! The difference is w naked you dont have to pre borrow which eliminates the need for you to prove you have the capital to back up the position you're taking since you're doing it on margin. So you can simply keep adding to it w/o the money to back it up. That becomes illegal bc you are not supposed to borrow what you cant cover.

the window to cover short positions is being reduced from i believe 5-3 days. this doesn't really affect day traders bc positions are not usually held over night. But the weird thing is that options market markets are no longer able to naked short as well. These guys have to and are supposed to be able to since their job is literally to reduce volatility in the markets by alway being either a buyer or a seller with their own capital.

What we will see happen here is people start to cover their positions which will cause a short squeeze, the share price rises exponentially bc there will be enormous amount of people buying to cover their positions. So we will certainly see an increase of maybe 5% total in the markets for a short period of time. It will eventually fall back down again and can very easily fall lower than where we are now. This is because exponential price increases cannot be sustained as volume will die down. Short selling sometimes get a bad rap.. as we're seeing here. But they they're not understanding is that for me to short something i have to have someone going long (a buyer) on the other end of the transaction anyway. Shorts dont drive down the markets, buyers selling a their positions do.

me personally id prefer to naked short all the time, and do when i can. Its so much faster than having to wait to locate shares. Especially when chart patterns are indicating a drop. I'll often miss short opportunities bc i can get shares quick enough and the stock has already dropped. thats the nature of the beast though. However, even when i naked short, i do make sure i have enough capital to cover and always have.

[Z28Envy]

Thats Sal and Richard from the Howard Stern Show.

:rolf That was them! I listen to stern all the time. Before I even clicked the link I said they are doing something gay!!

[Smokey1226]

I just checked today and my funds were down another 4% today. Man o man, im glad im young and dont have hundreds of thousands invested yet! Now ill be able to buy in and hopefully have some outstanding returns in the next few years.

[Fast SVT]

I still have no idea what short selling is all sounds like money making schemes to me that borders on simple gambling. The. AgIn I Am not into this stuff.

[GTSLOW]

You should be posting this in the politics forum.

We have a politics forum? :confused

[animal]

borders on simple gambling.

Sums it up nicely. Whats funny is that some people just don't grasp that and get all freaked out when the market tanks on them. Prolly the same people that can't believe they lost money at casinos too.

[Nick]

Trading is gambling. Naked shorting, shorting, buying puts, etc, are all different games in the trading (gambling) world.

[Adam Brooks]

I still have no idea what short selling is all sounds like money making schemes to me that borders on simple gambling. The. AgIn I Am not into this stuff.

from investopedia:
"The selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold short.
Investopedia Says... Selling short is the opposite of going long. That is, short sellers make money if the stock goes down in price.

This is an advanced trading strategy with many unique risks and pitfalls. Novice investors are advised to avoid short sales. "

We are charged interest based on the total dollar amount of shares we have borrowed at the time that they are sold.

as far as gambling, we go long or short based on criteria that gives us an idea as far as the future movement of the stock over a period of time. There a lots of indicators that tell us whats going up, down and moving sideways. There is certainly risk involved but we seek to minimize that risk going long or short so the odds of us being successful are much more in our favor, so to us its not like a casino at all

It IS gambling if you enter any position and have no idea why. At that point the average rate of loss is 90%. this is why most people who trade wind up losing money. 50% of that original 90 will lose everything.


McCain must have read the link i posted originally:
http://www.marketwatch.com/news/story/story.aspx?guid={9C42FC79-8348-46D7-BB51-9DCC7C28CA7C}&siteid=rss

[Karps TA]

I'll never understand why online gambling is illegal, and online trading is legit. I've done both, and I'll take sports betting anyday over playing the market. Atleast sports gambling depends on an actual outcome that makes sense. The stock market is more emotion driven. You'd have better luck sometimes trying to read a woman's mind.

[Adam Brooks]

You are correct, there's an entire science dedicated to figuring it out called behavioral finance.

Edit: McCain is still blaming us boo, at least he wants Cox out

[Adam Brooks]

http://www.foxnews.com/story/0,2933,424862,00.html

this ones funny. they wont find any conspiracy, the volumes on these things are wayyyyyy too high to manipulate. And they still dont realize that you have to have a BUYER at your offering price in order to even start a short sale.

And i dont know what they consider "bad information", incorrect information?
cnbc can tell you to buy everything under the sun and say they think it'll go up when it doesnt and thats ok (although incorrect). But as soon as you say i think the company is crap and will go down, and it does, you are the target of an investigation for trying to influence the stock price

[animal]

Did you just unintentionally describe betting strategy on the pass/dont pass line based on the established point?


as far as gambling, we go long or short based on criteria that gives us an idea as far as the future movement of the stock over a period of time. There a lots of indicators that tell us whats going up, down and moving sideways. There is certainly risk involved but we seek to minimize that risk going long or short so the odds of us being successful are much more in our favor, so to us its not like a casino at all
as far as gambling, we play pass or don't pass based on criteria that gives us an idea as far as the future rolls of the dice over a period of time. There a lots of indicators that tell us whats likely to be rolled next. There is certainly risk involved but we seek to minimize that risk by placing number bets so the odds of us being successful are much more in our favor, so to us its not like gambling at all.

Sure doesn't seem any different, except that the market doesn't shift as quick as the dice from day to day so there's less risk than the casino with less short term payout. It's really not all that different or difficult if you know the respective games. :devil