http://www.sec.gov/news/press/2008/2008-204.htm

Those who are savvy investors might want to chime in on this. Those who have money in WaMu may simply want to withdraw it.

Does not seem to be "realistically" enforced.

ETF - Exchange Traded Funds are still being traded, that do the same.

RFN :AMEX , Rydex Inverse 2x S&P Select Sector Financial
+ 17.9% today

SKF :AMEX , ProShares UltraShort Financials ProShares
+ 15.8% today

RFN :Rydex Inverse 2x S&P Select Sector Financial
+ 13.11% today

The SEC has been asleep at the switch. They should not have allowed it to be happening in the first place, IMO. I'm no expert, but I was under the impression that naked shorting is illegal. Ordinary investors can't do it; this is done by hedge funds and big players. Maybe some of these banks and investment houses would have been taken down to their knees anyway, but the naked short selling made it dramatically faster than it would have been.

... illegal ... unless you ["locate first"] - find someone willing to loan the stock to you.
To participate you have to sign special agreements and sign disclaimers with your broker.
Not for beginners; a lot of variables.
http://en.wikipedia.org/wiki/Regulation_SHO
http://en.wikipedia.org/wiki/Short_selling...urities_lending

Nobody can be forced to sell, permission must be granted.
People who are panicing may be vulnerable; traditionally things rebound.

If you are a passive trader and do not see theses "corrections" coming; you can loose some growth.

I know a lot of experienced traders that have been moving to cash [short term CD's and money markets] for 6-12 months.

Buyers market once they hit bottom for those with cash.

EXCERPT FROM YOUR WEBSITE:

"In an ordinary short sale, the short seller borrows a stock and sells it, with the understanding that the loan must be repaid by buying the stock in the market (hopefully at a lower price). But in an abusive naked short transaction, the seller doesn't actually borrow the stock, and fails to deliver it to the buyer. For this reason, naked shorting can allow manipulators to force prices down far lower than would be possible in legitimate short-selling conditions."

/////////////////////////////////

COMMENTS BY TARDIS AND THE HARE:

CHANGED RULES OF SHORT TRADES:

It sounds as though stock brokers, specialists, or brokerage houses have had the ability to transact short trades (selling stock that you don't own with the promise of buying it later), without actually trading in stock (just the promise from the broker that he will cover the deal should you profit, and get paid if you lose). The problem is, maybe the broker doesn't have enough money to cover the deal.

I believe that SEC rules are quite plain and specific about what can and cannot be done with stock transactions. It seems to me that this new ruling is quite all right.

BLAMING INVESTORS FOR THE DOW DROPPING:

I believe that I heard a Republican politician on TV say that he was going to make sure that stock market investors will not be able to use the market like a casino. It seemed to me that he was "sort of" blaming investors for reeling in horror at the horrible financial news, and this was his way of placing the blame for the stock market fall on the investors rather than on Bush. Good grief, these Republican-types will stop at nothing to shunt blame to others.

I BELIEVE THAT THE MARKET WILL RISE RAPIDLY:

As the Bush economy swirls down the potty, the dollar will devalue (even more than it has), and foreign investors will buy us. Oh, sure, things will look great for us as we sell General Motors, Ford, IBM, and a host of tiny corporations, bit by bit, but, eventually push will come to shove, and new money will stop coming in by the the sale of our own flesh (we will run out of corporations, and the US will have consumed itself). At that point, the economy will stop looking good, and there will be utter chaos. Right now, Bush is feverishly working on patching the cracks of the crumbling economy and hoping that they won't notice.

BLAMING AND DENYING AT THE SAME TIME:

Okay, I could understand if Bush blamed the economy on Clinton (I'd strongly disagree, but, okay, he could say what he wants). But when the Bush administration simultaneously tells us that the economy is just fine and also blames Clinton, their logic no longer makes sense. Why don't they tell just one lie and stick to it.

Shorting - otherwise known as "betting on failure" - ought to be illegal period, but when placed in terms of international markets, it's wicked dangerous. It encourages people to actively TRY to make things fail.

If, for instance, say.... Saudi Arabia, wanted to nuke us, they don't have to use a bomb, they can just buy up our banking stocks and short them, collapsing institution after institution, creating runs on the banks.

And with treasonous asshats like Gramm and McCain helping them out by gutting regulations that prevent things like wild speculation, well their jobs are made even easier.

While it's not clear that any particular single entity is doing targeted shorting like that in this case, the fact is, there are quite a few people who just got very rich doing that in this latest meltdown, and the other type of attack, is still a possibility.

And the type of person who'd engage in shorting is the same kind who'll create and profit from the next speculative bubble. The average person of course, the type who make actual THINGS, and keep a society physically running, are the ones who suffer. And the truth the people who are these market manipulators haven't yet realized is that if you continue to gut the support structure that makes their lives possible, eventually, it will come back and bite them in the ass - LITERALLY. There is a tipping point where people stop suffering and just get ANGRY. It's no accident that that same type of speculator will build their McMansions complete with "panic rooms" or full-on bunkers.

And that will be their future. Imprisoned in a bunker with their money. Just like the thieves they are.

This is what you get when your worldview is one of scarcity and greed, instead of one of bounty, sharing, interdependence, and cooperation.

Exactly. When the economy was purring along and the federal deficits were going down during the Clinton Administration, the Repukes kept saying it was because of Ronnie Raygun. Now that things are going in the toilet, last night on CNN I heard a Repuke talking head claim that the President has no effect on the economy, and anyone that believes that is just wrong.
Which is it? It can't be both.

The above posters have said what I would say........too little.....WAY to late........even the big guys get burnt.........when they don't catch the short train........


UAL sees potential US$544 million fuel hedge loss for third quarter

http://www.cfrb.com/node/791753

Whether or not they sell naked shorts is irrelevant. It's like worrying about what sort of pavement they have below the Chrysler building. Asphalt or concrete - if you just jumped off the top, the details of thelanding are pretty irrelevant.

What you are describing, is regular short selling, no?

The naked shorts don't borrow the stock. Hence, naked. And, illegal. Unfortunately, hasn't been well enforced. The big institutions and hedge funds have been able to get away with it, though.

5by5, I am almost always in agreement with what you post on here, but I have to disagree with one aspect of this post. Regular shorting of stocks does serve a purpose in the market; it keeps the companies honest, for lack of a better term. Bloated stocks that have to have a mechanism, or equalizing lever, to provide that balance correction if their balance sheets are outta whack, or are misrepresenting forward looking statements, etc. That provides opportunity for those who see a stock is undervalued, and buy it on the way up. Think of it this way. There are a finite number of shares. You cannot borrow, or short, what is not available on the other side. The naked shorts, though, do just that. This should never have been able to do that.

The manipulated stock market, raked over and destroyed by the hedge funds and the "geniuses" at Lehman, Goldman, and Bear who concocted financial instruments so complicated that nobody understood them, should all be prosecuted for massive fraud. Throw in the conspirators at the banks, mortgage companies (especially Countrywide), real estate brokers (who never change their amoral ways), appraisers on the take, and you have a caldron of miscreants never before seen on such a massive scale.

Now, we ordinary hardworking taxpayers will foot the bill. Naturally, having no political influence at all (other than the voting booth) the middle American will get shafted by Wall Street and Washington, the 2 largest sewers in America.

it's a market play that used to require your brokerage to actually take possession of the shares in question being shorted. A "naked" short is done without any shares actually changing hands.

It used to be that there was an "Up-tick" requirement on all short-selling. This means that stock must go up before a short sell can even be executed. Killing naked shorts and the up-tick standard has allowed the market to be so volatile. Investors tend to run in packs. One guys shorts, and the rest follow suit. It leads to piling-on type behavior. Why do you think Bear Sterns shares dropped in value as fast as they did? These restrictions set-up the market to quickly destroy any comp[any that is publicly traded, making it damn near impossible to stave off bankruptcy due to the speed that the company can become financially destitute.

In short, this is a good thing. Bring back the up-tick standard and we will begin to have the sort of regulation that allows for responsible market movement.

The uptick is a cardinal element of a species which will come back to visit us some - the DCB, or "Dead Cat Bounce," a theory in bionecrophysics which states that a dead cat, flung from a sufficient height, will rebound to a certain degree after impact.

The market will demonstrate some DCB's on the way down - and SarahJohn will point loudly to them and call them "RECOVERY!"

Even Enron executed some DCB's on the way down.

<3 ! much less than three for you, CS!

First, the "Wall Street" economy is the wrong measure. The "Main Street" economy is the right one. While "trickle down" theorists would like you to believe that as Wall Street goes, so goes Main Street, that is a lie. And now, as Obama says, we now see that "Pain trickles up" has more truth than "Wealth trickles down". So focus on Main Street, not Wall Street.

Second, as a strategist, I see NO strategic trends/forces on the horizon (3 years) which will improve this situation. I believe that 40% of the problem is understood, and this band aid being discussed is simply a bigger bandaid, but it too will fail. With this action, the only thing that will help is pushing the reset button on the American economy, re-evaluating its foundations and moving off in a different direction. This experiment has failed.

No !

The flow of the discussion was the differentiation between the legal and illegal methods of shorting. I offered a delineation of the difference; and the the method of purchasing through a broker.



IF you are contesting the factual nature .... please supply counter factual "references/links" .... or qualify as opinion.

original post ... you edited ....

Deleting the relevant references and not properly noting it in the copy of my post ... was disingenuous.

Sheesh. Calm down, ok
I shortened your post to what I was responding to. Just trying to do my part to save bandwidth around here. So many post the whole copy when the relevant part would do.

I was trying to clarify something, and asking you for that because I was confused with your post.
Play nicely. I know it's been a rough week, heck, eight years, but try not to lash out at fellow posters who mean you no harm.

you edited my posting that is a no-no ! Comprendo ? http://www.websters-online-dictionary.net/...anish/comprendo

Had you followed the links [that you deleted] they clearly supported, what I had posted; and your uncorroborated
"opinions".

full emoticons .... deleted to save band width ...

No one EDITED your post. The mods recommend that we shorten quoted material. The only reason to include the quoted material at all is to give a gist of who posted it and what the post was about. YOUR post is still EXACTLY like it was when you posted it.

original post
http://forums.therandirhodesshow.com/index...st&p=156208




as edited
http://forums.therandirhodesshow.com/index...st&p=157724



edited out of context ..... and not noted or represented.

I repeat: Your POST was not edited. Only the quote of your post. It's really not that big a deal. I usually try to insert the [...] or something but sometimes forget myself. Honestly, I'd rather the entire post NOT be included in a quote...and I don't really care if it loses context; if I want to know what was said, in it's entirety, I click the little button by where the original post is listed at the top.

Shoot I've seen a lot of our RRMB friends redact everything except who the original poster was and leave nothing but a thin, white band. I don't think anyone does this to attempt to derail someone's ideas.

OK.

The "quote of the post" was edited out of context [and not noted] ... it did derail the discussion ...
the references were paramount to the point, the following sentences, weren't ???
Cut the relevant and kept the irrelevant !

Everybody, due to speed of computer/connection - or what ever .... do not always link; and should not have to - to see the context, if honestly represented.


... rude and condescending response and disingenuous excuse/s ...

emphasis added ...

Amazed that he/she does not represent his/herself ...

The reference clarified it ... didn't shorten it, you edited the context, and kept the irrelevant. ?????

context :
1. the parts of a written or spoken statement that precede or follow a specific word or passage, usually influencing its meaning or effect: You have misinterpreted my remark because you took it out of context.
http://dictionary.reference.com/browse/context

Get over yourself. It appears that you want to pick a fight here, and I will let you do it all by yourself. I asked for clarification, you want a fight about what you 'perceive' as disingenuousness on my part. I will make sure that I don't respond to anything on the board that you have posted. Happy now?

NYTimes article both questions the ban on shorts (blaming the messenger) and indicates latest mother-of-all-bailouts might not even work:

Here's excerpt:

"The S.E.C. jihad against short sellers, which includes the banning of short selling on 799 stocks and forcing disclosure of large short positions, is nothing more than playing to the crowd. It is simply appalling that as one firm after another vaporizes — firms, let’s remember, that the S.E.C. was supposed to be regulating — the only thing the agency can think to do is flog the shorts."

link

http://www.nytimes.com/2008/09/20/business...p;8dpc&_r=3

Ty ... nice article

...
Then again, maybe the S.E.C. is trying to cover up its own culpability in this crisis. Four years ago, the agency pushed through a rule that allowed the big investment banks to take on a great deal more debt. As a result, debt ratios rose from about 12 to 1 to more like 30 to 1. Guess what Lehman’s debt ratio was when it went bust? Yep: 30 to 1.
...
...
It’s understandable why people get upset at short sellers in tough times. As President Bush put it Friday, short sellers are “intentionally driving down particular stocks for their own personal gain.” But that perception is more myth than fact, and in any case, it’s not the dynamic here. Stocks are falling because companies made huge mistakes that have caused them a heap of trouble. Indeed, in July and August, short interest in financial stocks declined by 20 percent. Why did the stocks continue to go down? Because there were too many sellers and not enough buyers: it’s that confidence thing again. Blaming the shorts is classic blame-the-messenger behavior.
...
http://www.nytimes.com/2008/09/20/business...p;8dpc&_r=3


IF you compare the books of the surviving banks to the failing ones - profits, and debt to equity ratios ...
those loosing should have been "noticed" much earlier.
Like the Enron, Tyco, etc. fraud - where the analysts seem to be "ignoring" the loses.

When Sen. Chuck Schumer notified the FDIC about IndyMac losses, and they ignored it - he went public and was vilified, for doing his job. Banking, Housing & Urban Affairs committee http://www.votesmart.org/bio.php?can_id=26976

Bear Stearns failed in March, Indymac was ignored until early July; yet had already lost more than they gained, for the year.

Makes you wonder how much the surviving banks may be overvalued, too !

More Bush hoping nothing else is "dis"- credited to his incompetence before he is out; surprised he hasn't resigned and flown to Paraguay already - no extradition rights !

Waits until he can no longer hide it - then blames the people trying to regain some of their investment.