Short selling lies

oldwiring

Debt_Free_Chick wrote: »

It's been "normal practice" for so long as I can remember (about 25 years).

Admittedly it was with Gilts, but 50 ago. A bundle of Gilts was lodged at the bank I worked at for the account of an insurance co by a broker and in the morning given out against the security of a grubby signed undated cheque sometime around the £1M mark. All really on trust because the parties could be trusted. As was said above, that sort of stock lending was to facilitate the market, to allow trades to be completed, and a far more honourable thing than shorting to make a selfish killing. Thing is can those who shout against what has happened truly say their hands are clean, when funds they may have invested in or pensions could've had the benefit.

esbo

The problem is brokers are sellingother people stock, stock they do not own.
That is theft. If they want to sell stcok the can go !!!!!!! buy some likle everyone else.

MarkyMarkD

Why do you keep going on about brokers?

I don't believe that your brokers are lending out your stock.

If you actually mean funds you've invested in, then that's a different matter - but they are doing it to maximise the return for you.

And they aren't selling it. They are lending it - and getting it back, plus a fee. That's not theft.

esbo

MarkyMarkD wrote: »

Why do you keep going on about brokers?

I don't believe that your brokers are lending out your stock.

If you actually mean funds you've invested in, then that's a different matter - but they are doing it to maximise the return for you.

And they aren't selling it. They are lending it - and getting it back, plus a fee. That's not theft.

Call them what you like, I know what I call them and its a four letter word beginning
with c. You need to stick an s on the end obviously. I have not recieved my fee, all I recieve is my devalued shares.
There is no column in my tacker fund for fees recieved from trashing your shares.
If I recieved a fee the only one acceptable would be one which is greater than the fall in value of the share,
hence nobody would borrow the fookers in he first place.

And if they really want my shares THEN THEY CAN BUY THE FOOKERS!!

Gopes

I have just skimmed through this interesting thread regarding the ethics of stock lending and short selling. And one question sprung to mind for Esbo.

Esbo:

Do you, per chance, have a bank account?

Do you think that your bank keeps the cash you deposit, in a big box for safekeeping?

What they actually do, is pay you a pittance in interest, and then take your money and lend it to over people (loans/mortgages) and charge a much higher interest rate, which they get to keep - it is one of the ways they make money.

So essentially, they are taking something they don't actually own (your money), and using it to make a profit, by lending it (money they don't own) to somebody else.

This is not really, any different from stock-lending.

Just a thought...Back to lurking...
Gopes

esbo

Gopes wrote: »

I have just skimmed through this interesting thread regarding the ethics of stock lending and short selling. And one question sprung to mind for Esbo.

Esbo:

Do you, per chance, have a bank account?

Do you think that your bank keeps the cash you deposit, in a big box for safekeeping?

What they actually do, is pay you a pittance in interest, and then take your money and lend it to over people (loans/mortgages) and charge a much higher interest rate, which they get to keep - it is one of the ways they make money.

So essentially, they are taking something they don't actually own (your money), and using it to make a profit, by lending it (money they don't own) to somebody else.

This is not really, any different from stock-lending.

Just a thought...Back to lurking...
Gopes

Yes it is different, my bank pays me interest such that my money is not devalued
in real terms. Thus it give me back more money thann what I initially put iin to make
up for any drop in the value of my money. The person lending my shares does not give me back extra shares to make up for any drop in the face value of my shares.
So it is totally different.

Masomnia

Two problems I see with your arguments.

1. Just because a share does lose value does not mean the owner has lost money. This only happens if you sell the share. So if you haven't sold the shares you haven't been 'robbed' at all, assuming they go back up again you're no worse off.

2. Short selling does not necessarilly devalue a share itself. Do you have any evidence of that? Those who short stocks are betting on it going down, not making it go down. If it goes down and they profit, it would've gone down anyway, and you'd still be out of pocket.

baby_boomer

Large scale selling makes a share go down.

This is geared gambling, and the gambler has an edge if the stock is a bank and the times are scary.

If your fund manager is lending out these shares, adding to management income, you have to ask if he is acting in your best interests. Are short term fees more important to him than the value of your equity holdings?

esbo

Masomnia wrote: »

Two problems I see with your arguments.

1. Just because a share does lose value does not mean the owner has lost money. This only happens if you sell the share. So if you haven't sold the shares you haven't been 'robbed' at all, assuming they go back up again you're no worse off.

2. Short selling does not necessarilly devalue a share itself. Do you have any evidence of that? Those who short stocks are betting on it going down, not making it go down. If it goes down and they profit, it would've gone down anyway, and you'd still be out of pocket.

The shares are being sold into an unfavourable market devaluing them against my wishes, they are my shares, nobody elses, anyone who sells them is a thief. It is for me to decide when to sell them as they are mine. If someone else wishes to sell such shares then they can jolly well buy them. They are creating a false market.
And apart from anything else they do not have my permission to sell my shares or lend them to anyone else, it is not the same as money in the bank.

As I said if they re to be lent then I must get back the same *value* of shares,+ some more for my trouble, as happens with money in the bank.

It is disguised theft, those involved are thieves and should be jailed.

The only people who could possibly be happy with this situation are either involved and profiting from it or simply fools.

Debt_Free_Chick

baby_boomer wrote: »

If your fund manager is lending out these shares, adding to management income, you have to ask if he is acting in your best interests. Are short term fees more important to him than the value of your equity holdings?

My understanding is that some of the income is reinvested in the fund - so the unitholder/investor shares in the income generated by lending the shares.

In "normal" markets, the price of the share won't go down. So the investor gets the shares at same value, plus a share of the profit from the lending.

One argument is that short sellers don't "drive the price down". Rather, they believe that the market has overpriced the shares and that they WILL go down, once the true value is outed. They gamble on this - and they don't always win. If they sell and the price goes up, then they've got to buy back at the higher price (but that position is almost certainly hedged). But remember ... if they're selling, then someone else is buying.

Perhaps .... the short sellers were right about HBOS