Agree the SEC report is very good. It is not in complete denial, it was simply looking at the workings of the market and deemed them reasonable for the protection of the three parties in any transaction. The reason some trading was halted was due to increased margin requirements at brokers due to the inflated trading, something that is in place to protect both parties in the trade, and this worked in this extreme scenario. No firms that acted as an intermediary for the transactions went bust, the only thing that took place was that investors on either side of the âbetâ either made a profit or a loss, as the market has always been intended to work.
I am a retail investor, and the system to me, works fairly but has room for improvement as below:
What does need looked at is PFOF. My view is all trades should be routed to the exchange first, and PFOF only allowed once a certain timespan has elapsed to help build liquidity in the markets, in which people are advised that on book trading is not liquid enough and to ask if you are willing to accept a wider spread before execution.
Dear Doug, commission and spread donât really concern me that much, I can live with it. All my worry is the After hours trading, Dark pools, they are like playground for SHFâs and HFTâs, they lack transparency.
If you own shares, you donât lose or gain until you sell the shares. If someone else makes money by lending you shares , I donât see what the problem is? If you are investing for a long term, these temporary changes are meaningless really. I donât believe any short seller has forced company to go bankrupt.
If you are investing via CFD, well that is very very risky (the warning says some 70% lose money)?
I believe what @Dmert2009 and others are trying to say is that lent out shares allow/facilitate shorting which in turn if it is done on a large scale can create bearish momentum and ultimately a vicious circle/a self fulfilling prophecy sort of.
I can see that happening and being possible
But I doubt the extent of this effect in the grand scheme of things
I lack hard data to support this effect and see how widespread it actually is
I am not a fan of shorting, I neither like the economics of it, nor the ethos. I share Buffets views on shorting in this matter. However I believe, shorting has its (small) place and compared to some other instruments it is way more harmless and less devastating
Except that shorting has provably been healthy for markets.
Heck, the GMEâs events that lead to many retail investors losing quite a decent amount of money only have been so devastating because of lack of shorting
A short seller is going to act exactly as a long buyer.
He is going to sell a market top, and buy a market bottom, and pretty much at the same moments a long buyer would do it.
These operations help smoothen out securitiesâ prices.
The main difference resides in the incentive.
Incentives of long buyer, governments, investment funds, stock brokers, stock article publisherâs, exchanges, and everyone else, is for prices to go up and up and up. More money flowing, more bonds issued, more commissions, more advertisment money.
Those incentives have been proven to render markets extremely toxics and unhealthy. Finances disconnect from the real economy, bubbles are created, and systemic risks propagate throughout the economy.
The repercussions of which result in destruction of value, not only in the financial markets, but in the rest of the economy as well. People lose their jobs, their pension, their appartement, or even die.
Short sellers are the only players in the market with an opposed incentive. So much so, that on top of selling bubbles in formation, and buying markets dips, they tend to have to produce research paper of their thesis if they have any hope of not being liquidated.
Those are not to destroy a market, or steal anybodyâs money.
These are to maintain a healthy link between pricing of financial assets and underlying real assets.
Without short sellers, the Stock Market is but a Ponzi.
Ok, thatâs enough 'ing about. I left the topic after saying my piece assuming a genuine discussion might play out for those interested. accuse me of stifling free speech if you will but this has gotten ridiculous.
this is clearly not a discussion that is doing the community any good and the OP doesnât seem to be leading the topic in any decent direction. So being the parasite short seller I am (funny how I have never gone short on a position but who cares ) I will play the dirty evil Schmuck and draw this to a close.
Hopefully the next topic on the subject will be about the merits or demerits of the practice and an analysis of its influence. something that may be both enjoyable and educational to discuss.
@Dmert2009 If you plan to stick around for any length of time, consult the forum guidelines before launching your next self-righteous tirade. you started off alright then lost credibility as you kept pushing. everyone here is a retail investor, you donât speak for any of us. in fact the retail traders donât often use the community forum as they are too busy researching and managing their money.
Still interested to give it a watch.
'ing about. I left the topic after saying my piece assuming a genuine discussion might play out for those interested. accuse me of stifling free speech if you will but this has gotten ridiculous.
) I will play the dirty evil Schmuck and draw this to a close. 