The people to blame

Pobby

From the bbc. These are the people who are affecting everyone in a negative way

http://news.bbc.co.uk/1/hi/magazine/7625107.stm

and they will get away with it!

WTF?_2

Pobby wrote: »

From the bbc. These are the people who are affecting everyone in a negative way

http://news.bbc.co.uk/1/hi/magazine/7625107.stm

and they will get away with it!

You have to laugh at the way the blame is being dumped on short sellers for the current woes of the market.

Meanwhile, politicians are getting ready to bail out those really responsible - the banks who made stupidly risky deals - from the results of their own greed and stupidity. With our money.


Even 'better'; apart from buying a brief amount of time - enough for the particularly thick guys at the top to finally take the hint and get out of the market before it totally collapses - this is just going to make the endgame even worse for the real world.

StevieJ

Pobby wrote: »

From the bbc. These are the people who are affecting everyone in a negative way

http://news.bbc.co.uk/1/hi/magazine/7625107.stm

and they will get away with it!

I am still trying understand why someone would willingly lend a share to a shorter who would then undermine that share and hand it back worth alot less.
If tracker funds are doing this (to make a quick buck) i.e. abusing customers funds (whether agreement included in the terms and conditions or not) they should be dealt with.

WTF?_2

StevieJ wrote: »

I am still trying understand why someone would willingly lend a share to a shorter who would then undermine that share and hand it back worth alot less.
If tracker funds are doing this (to make a quick buck) i.e. abusing customers funds (whether agreement included in the terms and conditions or not) they should be dealt with.

Because they 'borrow' the shares from people who have committed to going 'long' on them - like pension funds.

The holder has the chance to make a nice profit for next to no effort on their part - they were committed to holding the share for x more time anyway.


At the end of the day, as the name implies short selling is about making money on the short-term future price of stocks, not the long term price. The shares have to be bought back when the shorter closes their position so over the longer term it shouldn't have an undue affect on the price of the stocks which will vary over time anyway.


As for the banks being taken over or going bust - it's rubbish to claim that short sellers 'forced' HBOS into selling out. If the bank was solvent and had a secure future then it wouldn't have mattered what was happening to the share price. The share price is the symptom and not the cause of the problem.

Generali

StevieJ wrote: »

I am still trying understand why someone would willingly lend a share to a shorter who would then undermine that share and hand it back worth alot less.
If tracker funds are doing this (to make a quick buck) i.e. abusing customers funds (whether agreement included in the terms and conditions or not) they should be dealt with.

Because they make more money for their investors by lending shares. If a fund buys some shares and then lends them out, it's the investors in the fund that make money, not the fund manangers.

Short selling doesn't drive prices lower than they would otherwise go. They probably mean that prices get there a bit quicker but nothing more. Whether a share is sold short or from an existing long position there still needs to be a willing buyer at a particular price. If you keep short selling shares very cheaply then you'll end up losing money.

IMO, short sellers are an easy scape goat for the press to use as people don't really understand what they do for the most part and don't understand = scary.

dopester

The article does not give the right message about short-sellers.

Short-sellers, as a group, are usually the smarter, most intelligent investors.

They are less likely to get caught up in any boom-mindset, "here put my money in subprime investments"... "Look at house price rise 280%, I'll remortgage and get another."

They are more likely to STR back in 2007 or earlier.

Short sellers are like vultures in the market, and I say that in a good way. Their actions have always been worthy of monitoring.

Like vultures, in the market they gather over the weak, sick, injured, and the lost. Ignore the signs of short sellers gathering in the market at your peril - or at least before the new rules came in to block them.

No one can convince me they weren't justified in gathering on HBOS.

Explaining why HBOS needed a rescue merger with Lloyds TSB, Mr Hornby said: "We found ourselves impacted by the wholesale markets shutting. We were particularly dependent on wholesale funding."HBOS was exposed because of its £198bn so-called "funding gap" - the difference between customer deposits and customer loans.

The funding was originally provided by institutions through the money markets, but they have shut down on fears about the declining quality of assets and the longevity of the banks.

The market is skewed without short-sellers having freedom. Keep in mind in India they also tried to get rid of vultures and considered them evil and unlucky. Now with their number dwindled, they realise they made a huge mistake and are having to take steps to help restore their number, as the vultures feed on carrion which otherwise rots and spreads disease.

http://news.bbc.co.uk/1/hi/world/south_asia/4372783.stm

Vultures have an important ecological role in the Asian environment, where they have been relied upon for millennia to clean up and remove dead livestock and even human corpses.

Vultures hold a critical position in the food chain and are renowned for their ceaseless scavenging.

StevieJ

!!!!!!? wrote: »

Because they 'borrow' the shares from people who have committed to going 'long' on them - like pension funds.

The holder has the chance to make a nice profit for next to no effort on their part - they were committed to holding the share for x more time anyway.


At the end of the day, as the name implies short selling is about making money on the short-term future price of stocks, not the long term price. The shares have to be bought back when the shorter closes their position so over the longer term it shouldn't have an undue affect on the price of the stocks which will vary over time anyway.


As for the banks being taken over or going bust - it's rubbish to claim that short sellers 'forced' HBOS into selling out. If the bank was solvent and had a secure future then it wouldn't have mattered what was happening to the share price. The share price is the symptom and not the cause of the problem.

Could you explain to me how the pension fund that handed over the Northern Rock shares at X value and received them back worth probably nothing gained?

neverdespairgirl

I think it's more that they thought they would gain, rather than they actually did.

kennyboy66_2

dopester wrote: »

Short-sellers, as a group, are usually the smarter, most intelligent investors.

They would have you believe that, however it is simply not true.

Arguably they may favour more risk (with more reward), but they are not any different than many other market participants.

Many have claimed to be the most intelligent investors - events usually overtake them at some stage.

John Merriweather & Myron Scholes were once the smartest investors - until LTCM crashed.

They should however be just allowed to carry on doing what they were doing. The last thing we need is more spurious regulation.

StevieJ

kennyboy66 wrote: »

They would have you believe that, however it is simply not true.

Arguably they may favour more risk (with more reward), but they are not any different than many other market participants.

Many have claimed to be the most intelligent investors - events usually overtake them at some stage.

John Merriweather & Myron Scholes were once the smartest investors - until LTCM crashed.

They should however be just allowed to carry on doing what they were doing. The last thing we need is more spurious regulation.

I agree, I have no problem with the short sellers, the point I am trying to flush out is whether some fund managers are acting counter to the interests of their clients.

dopester

StevieJ wrote: »

Could you explain to me how the pension fund that handed over the Northern Rock shares at X value and received them back worth probably nothing gained?

Most of the short-sellers had feasted well on NRK. Down from £12 wasn't it?

I don't think you can use the example of RAB Capital who thought the Government would come along and fatten up the shares they actually bought with a huge handout to make the bank a working and valuable entity again as a valid example.