Comments on: What’s next ASIC? Ban trading altogether?

By: davo

davo — Thu, 01 Jan 1970 10:00:00 +0000

ASIC: A*seholes, sh*ts, incompetents corporation…

By: Malcolm

Malcolm — Thu, 01 Jan 1970 10:00:00 +0000

Kate, you are right in that shorting is not looked on well at the moment as the professional short sellers NEED the price to drop hard. The best profits are to be made when you place a very low short on a solid stock.

The trick would be to get a bunch of like minded souls (do Dealers have souls?) to also place really low shorts and then when the market hears about it the shorts act to drive the price down to where you want it to be.

The best bet is to then hold the shares and sell them when the price rebounds. The problem is that not all of the people selling when the shares drop artificially are your mates ans so simply dump and run. They are known as 'suckers'.

By: kate

kate — Thu, 01 Jan 1970 10:00:00 +0000

I'm a reasonably intelligent and well-educated professional, but I admit I don't understand this at all.

Could someone please provide an idiot's guide? - small words please, minimal jargon. Assume nil prior knowledge. I can balance my credit card but that's about it.

Many thanks.

By: RJG

RJG — Thu, 01 Jan 1970 10:00:00 +0000

I’m no admirer of ASIC. Watchpuppy it is. But what a load of hysterical nonsense! They aren’t banning shorts forever, just a month. Ans whose going to lose money over it. Not the real economy. What never ceases to amaze me is that it is never the physical world that creates financial crisis. It’s not the people who make thinks or provide tangible services to others. It’s always the same old shower! The financial engineers, using their rebadged foot soldiers the finacial planner s(insurance salesmen) to extract the loot. The people who always work on a percentage and are always there when a transactions made. Of course the more transactions there are the richer they get. Have alook at where the average household budget gets spent. It’s not on power, it’s not on fuel, No it’s on the financial sector. See Beureau of Stats website for consumer price index if you don’t believe.

By: slapojacko

slapojacko — Thu, 01 Jan 1970 10:00:00 +0000

It’s a pity that it’s taken ASIC so long to realise the damage that shortselling has been causing to the market. My superfund lends out stock and gets up to 6% per annum in interest, but my super has fallen 20%, so I certainly don’t support short selling and it’s sister SBL.

By: JamesK

JamesK — Thu, 01 Jan 1970 10:00:00 +0000

Kate: “to go long” is to bet that a price will go up at some point in the future. That could be as an option to buy or by actually buying shares to sell in the future. To sell or go short is to bet that the price will go down either by selling shares that you do not own but are held in trust by a brokerage and buy them back later at a hopefully lower price or by buying an option to buy at a lower price in the future and exercising it later if the option price is lower than the market. The options can be traded a well.

By: marion diamond

marion diamond — Thu, 01 Jan 1970 10:00:00 +0000

The major problem is the abandonmet of the uptick rule. This has allowed cashed up short sellers to drive down prices where margin calls are inititiated and then buy these shares. With the uptick rule this was not possible and short sellers, whether borrowed or naked, could not artificially drive down the price of selected shares. there is no real reason to abandon short selling if the uptick rule applies.

Marion Diamond

By: Frank Birchall

Frank Birchall — Thu, 01 Jan 1970 10:00:00 +0000

A farrago of market-babble with no clear position other than Michael doesn’t like ASIC and Macquarie Group. (It’s a pretty safe bet that his family super fund contains no MQG shares.) Michael doesn’t seem to appreciate that what is going on globally is one of the worst financial crises in the past century and the end is nowhere in sight. Events of this magnitude don’t lend themselves to lengthy reviews and debate before corrective action is taken. OK, ASIC’s action on short-selling was belated, but only relatively so; is Michael suggesting that there should be no ban on short-selling? Who’s to say what constitutes “totally legitimate market activity”? While it will take time for clearcut evidence to emerge, it seems that short-sellers (naked and/or covered) were driving an attack on MQG that had the potential to be extremely harmful to all stakeholders. This attack, so it seems, was being fuelled by false and exaggerated rumours peddled in the media. Is this fair or just? Of course not.

I don’t have much sympathy with CFD traders — as Michael suggests, this is just leveraged stockmarket gambling and an example of the growth of derivatives that underlies some of the present chaos. Long/short positions may or may not be fine but it’s hard to see much point in the example quoted. Undoubtedly the embargo on short-selling will hurt some investors but “collateral damage” may be unavoidable when decisions have to be made quickly in the interests of “the greater good”.

By: RJG

RJG — Thu, 01 Jan 1970 10:00:00 +0000

By: Andrew

Andrew — Thu, 01 Jan 1970 10:00:00 +0000

If you wanted to demonstrate that there is a bubble in shares then nothing says it like outlawing a trade based on declining prices. Spot the naked emperor.

By: kate

kate — Thu, 01 Jan 1970 10:00:00 +0000

Ok, that makes sense. So, why is short selling banned? Is it that short selling provides an incentive to drive the market down, or is there more to it than that? And why can’t the market correct itself? [Yes, I understand these are naive questions - your patience is appreciated]