Short-sale ban list expanded to include GM

[drew770]

Instead of doing a knee jerk reaction such as banning shorting selling which serves a purpose. The SEC should just reinstate the Uptick Rule.
A former rule established by the SEC that requires that every short sale transaction be entered at a price that is higher than the price of the previous trade. This rule was introduced in the Securities Exchange Act of 1934 as Rule 10a-1. The uptick rule prevents short sellers from adding to the downward momentum when the price of an asset is already experiencing sharp declines. The SEC eliminated the rule on July 6, 2007.

[steinravnik]

Originally Posted by MonaroSS

You know when there is a serial killer and the cops think they know whose to blame so they throw him in jail and then another killing happens anyway as it wasn't really the guy getting all the blame.....

Today GM stock fell 11% and all the short sellers were locked up in jail......

If this were an ordinary day with short selling allowed you people would all be blaming it on short sellers, when in fact the stock fell because investors who own GM just wanted to get rid of it. And all those times before when short sellers were being blamed for falls in GM stock a lot of that was just investors wanting to get out of it too.

Like hyenas or sharks or wolves, short sellers serve a real and valuable purpose in the market. They provide liquidity for one and they cull the dead wood and the sick out so the healthy companies can grow and prosper.

When you ban short sellers you risk bad unintended consequences. Just like when they erased wolves from western US states the deer populations grew and they overate the saplings that did not then grow into the trees that beavers made their lodges and dams from; so without the dams the wetlands dried up and the bird and fish populations that relied on them died off and then pest insects increased. When you mess with a balanced eco system like the free markets, by taking out a natural predator, then bad things can and will happen.

So today without any short selling the financials and general market fell enough to put it in the top ten down days in history. But unlike if this was due to short selling, there are no shorts that need to cover their positions, which can lift the market back up again. So the markets may just drift lower and lower and become more and more depressed without the volatility and liquidity the short sellers provide.

I agree 100%

[Beau]

"Wow even a diversified conglomorate like GE!

It is obvious that Sen dodd (d) and Sen obama (d) have really allowed the financials to go tlts up in part by their turning the other cheek and receiving millions of dollars in kickbacks from Fannie Mae and Freddie Mac (they are, by far, the top two in kickback dollars received).

That's alright, I'm sure the media will make Bush the culprit again."


Requoted for truth.

But honestly, I don't think anyone is actually blamming Bush for this. It's not by his fault that people invested and STAYED invested in over inflated paper(mortgages).

However since people don't like Bush, him being is office is part of the reason investor confidence is down, which is why were are where we are...

[gto4ibf]

This is very good. Maybe now the stock will go up and it will take the hurt off of some of the employees that have a ton of stock options