Government bans short selling from midnight ??

tradetime

esbo wrote: »

You are basically saying he will bet against himself backing a horse to win and lose

It's called a hedge, playing a long term position and protecting in the short term.

esbo wrote: »

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..

The point isn't to make money, from the hedge, DUH, the hedge protects a position, jeeze. Do you have two heads by any chance? "Dealing costs" in your world, and actually mine cost money, for large institutions they cost nothing, Education point: The more you buy and sell the less they charge you, volume discount don't you know.

esbo wrote: »

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.

Duh yes a hedge position does not seek to make the stock fall, or rise for that matter, it seeks to do nothing other then protect the holder. A put option against an already held position gives the right to sell, not buy.
LOL, just looked at all this discussion, fair one, you caught me, you're a wind up merchant, you're not really that stupid :T Fair play.

esbo

Debt_Free_Chick wrote: »

Just catching up and I was about to patiently respond to post #49 until I read post #50 when I thought ..... this has to be a troll :rolleyes:

And for that reason "I'm out"

Abuse reported.

esbo

tradetime wrote: »

It's called a hedge, playing a long term position and protecting in the short term.

The point isn't to make money, from the hedge, DUH, the hedge protects a position, jeeze. Do you have two heads by any chance? "Dealing costs" in your world, and actually mine cost money, for large institutions they cost nothing, Education point: The more you buy and sell the less they charge you, volume discount don't you know.

Duh yes a hedge position does not seek to make the stock fall, or rise for that matter, it seeks to do nothing other then protect the holder. A put option against an already held position gives the right to sell, not buy.
LOL, just looked at all this discussion, fair one, you caught me, you're a wind up merchant, you're not really that stupid :T Fair play.

I am not a wind up merchant and I suspect your attempts to discredit me are because you benefit in some way from short seling as a broker perhaps.

You are trying to defend the position whereby by broker can borrow my shares against my permission (theft) and sell them into a poor market thus devaluing them.

This position is undefendable unless somehow you benefit from it, no true investor
would defend a position that lost him money so I have to conclude that you are
a broker/trader or someone who has been brainwashed by simlar 'spivs'

cvd

Esbo,

My understanding is that even pension funds are prepared to loan out shares for short-selling.

A pension fund is interested in a long term gain. A hedge fund may be interested in guarding or hedging against the possibility of a short term loss. So both sides gain from the arrangement.

Of course, if the short sellers are aiming to drive down the shares so far that the company is in difficulty - then that is not in the pension fund's interest.
In most market conditions, that sort of extreme effect is not possible, but currently it is and so it has been temporarily stopped.

Short selling in most cirumstances is a perfectly valid thing to do, both sides benefit and it is useful for the efficient working of the market - unlike carpetbagging, for example, or even voting for demutualisation which is always motivated by greed and selfishness and completely ignores the motives of those who started the organisation who typically endured some considerable sacrifice for the benefit of others.

esbo

cvd wrote: »

Esbo,

My understanding is that even pension funds are prepared to loan out shares for short-selling.

A pension fund is interested in a long term gain. A hedge fund may be interested in guarding or hedging against the possibility of a short term loss. So both sides gain from the arrangement.

Of course, if the short sellers are aiming to drive down the shares so far that the company is in difficulty - then that is not in the pension fund's interest.
In most market conditions, that sort of extreme effect is not possible, but currently it is and so it has been temporarily stopped.

Short selling in most cirumstances is a perfectly valid thing to do, both sides benefit and it is useful for the efficient working of the market - unlike carpetbagging, for example, or even voting for demutualisation which is always motivated by greed and selfishness and completely ignores the motives of those who started the organisation who typically endured some considerable sacrifice for the benefit of others.

You say both sides benefit, however there is another side involded the shareholder
he gets no benefit whatsoever, the only 'benefit' he sees is the possible trashing
of his shares. That's why it must be stamped out.

Pension companies should no be abusing people pensions in this way for short term gain, it's disgusting and should be illegal because it is theft.

Futhermore any pension fund managers who lend out other peoples shares in this way, should IMO be jailed.

cheerfulcat

esbo wrote: »

You are trying to defend the position whereby by broker can borrow my shares against my permission (theft) and sell them into a poor market thus devaluing them

Your broker cannot lend your shares without your express permission.

Pension companies should no be abusing people pensions in this way for short term gain, it's disgusting and should be illegal because it is theft.

How is it theft? If the manager of the BT pension fund, for example, chooses to lend stock it has absolutely no effect on those in receipt of a pension from BT.

Again, you are ignoring the fact that short selling in itself does not bring the share price down. The vast majority of selling of bank shares over the last year has been straight selling by people who see no immediate value in them. That's what has affected the price. Do you want to ban all selling of shares?

By the way, your ire would be better directed at those who got us into this mess in the first place, starting with the regulators.

turbobob

If you use a CFD to short a stock am I right in thinking that no actual stock changes hands?

esbo

cheerfulcat wrote: »

Your broker cannot lend your shares without your express permission.

That's not the impression I get from some comments.

cheerfulcat wrote: »

How is it theft? If the manager of the BT pension fund, for example, chooses to lend stock it has absolutely no effect on those in receipt of a pension from BT.

When those shares are sold into a poor market they are devalued, hence the pesnion
fund is devalued. People don't pay fund mangers to devalue their pension, those who do it should be sacked.

cheerfulcat wrote: »

Again, you are ignoring the fact that short selling in itself does not bring the share price down. The vast majority of selling of bank shares over the last year has been straight selling by people who see no immediate value in them. That's what has affected the price. Do you want to ban all selling of shares?

That's not short selling though is it?
Because:
1. They are selling shares they own.
2 They are not buying the fookers back at a lower price.

You would only profit from doing that if they were someone elses shares and you could pocket the difference.

cheerfulcat wrote: »

By the way, your ire would be better directed at those who got us into this mess in the first place, starting with the regulators.

And who funds the regulator (the FSA) ???
It is funded by the firms it regulates!!! :rotfl:
It seems short selling by mutual funds was banned untill 1997 which just happens to be when the FSA was set up!!!

Like all our 'regulators' the FSA is bent useless and crooked, stuffed by the villans it is supposed to be regulating. Incidenty Sir James Crosby former chairman of HBOS is the deputy chairman of the FSA. He is also spearheading the governments group to sort out the mess he created in the houseing market!!

The whole system is rotten to the core. None of the villain are punished, instead they are awaded bonuses and top jobs. - Sick.

GordonGecko

Esbo

Are you against short selling of just shares or all products?

GordonGecko

turbobob wrote: »

If you use a CFD to short a stock am I right in thinking that no actual stock changes hands?

Correct -

Simply put, it is a contract that mirrors the performance of an underlying instrument. It is traded on margin, and just like physical shares your profit or loss is determined by the difference between the price you buy at and the price you sell at.

Profit and loss is credited and debited to your margin deposit as the market moves. Margins are typically 10% or less on Share CFDs and 1% on Index, Commodity and Treasury CFDs

A CFD is an open-ended contract, if you have not closed your position by the end of the trading day, then the position is rolled into the next day. At this point, financing is paid or received. Provided that you maintain enough available margin, your position is maintained indefinitely.