Government bans short selling from midnight ??

esbo

poppy10 wrote: »

You clearly don't understand short selling at all.

No that is you.

If you are so clever explain to me who would lend HBOS stock they own in the
past week knowing doing so would make them poorer.

Show how clever you are.:xmassign:

tradetime

esbo wrote: »

And now the question that none of you can answer.

Who holding HBOS stock would have lent it to someone else, knowing that by doing so they were making themselves poorer?

1 pound of potatos to the correct and answer, I bet nobody can guess.
You ain't clever enough.

Well I predominantly operate in the US markets, so my understanding of accepted strategies in th UK markets may be a little off target. But assuming the same practices work the answer is quite simple.

Unlike you, the institutions lending the lions share of stock for short sale understand the role of shorting in the markets, lending stock out does not make them significantly poorer as they hedge their positions either as an example by buying put options or selling call options or both.

Stompa

Stompa wrote: »

http://www.blackrock.co.uk/IndividualInvestors/MarketView/MarketViews/UKCommentary/index.htm

Impact on BlackRock UK Absolute Alpha Fund

It's worth noting that this has now been updated since my earlier post. Probably best to follow the link rather than attempt to reproduce it here.

esbo

tradetime wrote: »

Well I predominantly operate in the US markets, so my understanding of accepted strategies in th UK markets may be a little off target. But assuming the same practices work the answer is quite simple.

Unlike you, the institutions lending the lions share of stock for short sale understand the role of shorting in the markets, lending stock out does not make them significantly poorer as they hedge their positions either as an example by buying put options or selling call options or both.

You are basically saying he will bet against himself backing a horse to win and lose
now doing this is a waste of money because you can't make any money
whatever the result all you do is incur dealing charges.

Futhermore this will not make the share price fall because your put option effectively buys shares, a purchase wil have to be made to cover it, so you are just buying and selling the same amount of shares.

Debt_Free_Chick

esbo wrote: »

And now the question that none of you can answer.

Who holding HBOS stock would have lent it to someone else, knowing that by doing so they were making themselves poorer?

Why is the lender of the stock poorer?

They get the same number of stock back. They don't shell out any money. They get money from the borrower. So ... they end up with money AND the stock back.

I don't wish to be rude, but are you sure you've understood what goes on here?

cheerfulcat

esbo wrote: »

Who holding HBOS stock would have lent it to someone else, knowing that by doing so they were making themselves poorer?

esbo, stock lending is generally done on a large institutional basis, not by small retail investors. You can read more here.

GordonGecko

Esbo

Do you have knowlegde of how markets operate? What goes on in exchanges?

esbo

Debt_Free_Chick wrote: »

Why is the lender of the stock poorer?

They get the same number of stock back. They don't shell out any money. They get money from the borrower. So ... they end up with money AND the stock back.

I don't wish to be rude, but are you sure you've understood what goes on here?

Because it is no longer of the same value, when you borrow from a bank you have
to pay interest and the interest rate is very high for a declining currency which
is losing value. No interest has been paid. Thus it is theft.
If you hold you house deeds with a bank it cannot sell them and buy them back that
would be illegal,

esbo

cheerfulcat wrote: »

esbo, stock lending is generally done on a large institutional basis, not by small retail investors. You can read more here.

But those institutions such as pension companies are supposed to acting in your best
interest not trashing the value of your pension fund.
It is absolutely scandelous that they can lend out stock which you have purchased
so that its value can be trashed.

The only people who think this is a grand idea are the crooks (dealers, brokers, pension company worker) who profiting from it. And of course magically, on news
programs about the matter it is these crooks and villians who a wheeled out to
give their opinion and of course they think they should carry on with their little
robbing scheme, no surprise there.

They trump out some weak excuse disguised in market jargon to make it sound as if is a grand idea when in reality it is nothing but. However if they asked anybody who
actually paid for the share in HBOS they would say it is a very bad idea, infact theft.

I am no mug and I can see it for the theft it is. It is always the case when thinks become over complicated that a fraud is taking place, as was the case with the sub-prime lending scandal.

I know what I am talking about I can smell a thief from a mile away.

It will be stopped.

poppy10_2

esbo wrote: »

Because it is no longer of the same value,

It could be of the same value. it could be worth less. Or it could be worth more. The short seller thinks the value will go down, and borrows the shares, sells them immediately, buys them back at a later date and gives them back to the person he borrowed them from. If the price has gone down, he makes a profit; if the price goes up, he could make significant losses. Either way, the original owner of the shares gets exactly the same number of shares back, plus a transaction fee. I still don't see what you regard as theft in this situation.