Don't try to tell me that increasing the supply of stock sold by "borrowing" it from its owners does not tend to force the price down or try the duplicitous line about there being a buyer for the increased supply because clearly the equilibrium price will be lower than it would have been without the extra shares put on the market by the parasites. Even basic economics refutes that b.s.
Short sellers spread false information to drive down companies stocks to their (and to everyone elses' disadvantage) advantage.
The uptick rule has little if any long term impact on short sellers strategies and minimally on their tactics.
The absence of short sellers in the German market has not allowed asset prices to get out of line so some how it is able to survive without the good offices of Dracula's henchmen. How could that be?
Borrowing to purchase stocks is in no way similiar to the parasitic torpedoing of capital formation requisite to these bloodsuckers' success.
The only stock I know for a fact that the shorts cut out from under me was Quarterdeck a few years ago. There was no good reason for its stock price to fall until the daily volume of short sales escalated dramatically. Are these assaults co-ordinated by groups of shorts? Do they decide to attack a certain company then swing into action against it in a feeding frenzy slashing its value by repeated sales? Yes and yes.
If insurance and pension companies are providing the material for shorting they should be in court immediately for violating their fiduciary responsibilities to their clients. But I doubt if that is the case for a few percentage points in interest. There could be other fraudulent reasons for doing so but none for sound financial reasons. They can make far more by selling covered calls against their position without undermining their portfolio.
If you profit from this economic bloodletting I can understand your defensiveness but it will take far more theoretic firepower than you have brought to bear to obscure the basic nature of this irrational and immoral procedure. The stick-up man profits from his activities too but don't expect me to look the other way from his thievery.
You’ve got it right. Supply and demand drives the value of all assets in a market. Increasing the supply through the creation of “short share entitlements” increases the supply and results over time in a decrease in price if demand does not follow. Which it is likely not going to do on any typical stock over any typical period.
The uptick rule is irrelevant to market makers. If you were to buy 1000 put contracts with a Delta of .6 the market maker is going to short sell 60,000 shares which he is entitled to print via his exemption. In addition, the uptick rule is further irrelevant because the short seller is not seeking to make a gain in an hour or a day but over time. He can rely on normal market trading and supply/demand to erode the price over time. We can talk about ‘reverse conversions’ as well wherein a short seller will utilize the market maker exemption by simultaneously constructing an option transaction and a stock purchase from the market maker - the market making desk assumes the short position but is hedged through the options, while the short seller is effectively handed hundreds of thousands of “long shares” which he can sell into the market without regard for the uptick rule.
There is no market in the world which allows you to sell an asset belonging to a 3rd party. This is theft. It is all the more egregious that this is being done with the express intent of devaluing the asset so you can replace it at lower cost later. While this may be legal in our markets, it is a total breach of the spirit of fiduciary duty that stock brokers are allowed to do this with shares their clients entrust as a hopeful store of value in the future.
The “price discovery” comment is just as ludicrous. Short selling may help current and future purchasers of stock obtain a lower price but this comes at the expense of current stock holders who see value erode.
And of course, declining and even sideways moving stocks are usually the stocks investors choose to sell at any given time - especially at year end where the tax code encourages the dumping of losers to offset gains, which is an indirect aid to short sellers but not one that goes unnoticed by them.