Ban on Short-Selling effect? & My predicament

SilverSix

What are peoples views on the ban on short selling? Having looked over the FTSE100 today it seems to have been less volatile and generally quite steady throughout the day.

Obviously nobody has a crystal ball however is today's performance and indicator that the measures are working? or could it be down to another factor?

My reasoning for asking is that I'm using my portfolio to fund my house purchase in October, which is a little while off. If the ban on short selling is going to lead to a recovery on the FTSE100 over the next 2/3 weeks, whilst it may only be temporary, for me this may be a good time to liquidate my portfolio. As I have a feeling it might very well bottom out again soon.

I plan to see how the FTSE100 performs next week and if it seems to have been consistently stable and on it's way to recovery around the 5600/5800 points mark for the following week then I'll happily cut a small loss and take what I can whilst it's up. This is of course assuming that no horrifically bad news comes from the EUzone.

As I fear that once the ban on short selling is lifted the volatility will begin again. Especially if some bad news does present itself it'll be falling anyway.

As my portfolio is managed by Cofunds I have to write to them in advance requesting a surrender which will then take anything up to a week to process & pay from receipt of my letter. So it's very much up in the air as it could take a nasty turn after I send the request.

I guess I don't want to miss an opportunity to withdraw whilst it is slightly recovered to then find it bottoms out again leaving me much further down come October time.

Any thoughts & suggestions would be appreciated

Thanks,

Ben

CLAPTON

my view is the ban of short selling will make no difference whatsoever.

it's simply a political act so that politicians can be seen to be doing something and rather than blame the poor fundamenals they can blame it on 'speculators'

the ftse100 has probably improved today due the excessive drop over the last week or so.

in my view and knowing little of your circumstance, you are simply gambling if you have to liquidate your holding by October

Ark_Welder

Today is certainty. Tomorrow is speculation. Your portfolio could rise in value, but if it was to slowly fall between now and October then would you keep thinking that you might hang on for a little longer in-case it recovers? Would you be able to make up any shortfall - which cannot be quantified at this time?

Banning short-selling in four european countries on a limited number of stocks will not stop markets from falling. Neither the US or UK are introducing a ban (disclaimer....etc, etc) and some of the relevant european stocks can be traded and shorted on the LSE and NYSE.

SilverSix

Thanks for the input.

The drop in markets has eaten up most of my contingency funds which I was planning to overpay the mortgage with initially. I do have more left however most of this has been allocated to furniture & fixtures (tiling & carpets etc). So I can still complete should I find myself worst case.

I think it's going to be very much hit & miss if volatility continues and recovery is still underway as to when I decided to liquidate. Ideally I was considering cashing in before the next US jobs data report as a couple of signs were pointing towards this report being potentially damaging.

I guess it all comes down to how soon a resolution for the EUzone is produced and confidence in investors rises.

jamesd

What will you do if the markets drop another 30% between now and purchase day? What if they drop 15% on one day before you can react?

You have a need for certainty of the amount of money that you will have in two months. Unless you can take a big drop and still complete the purchase you need to get out of the market now, with at least sufficient money to ensure that you can complete the purchase.

It's tempting to stay in and hope for a recovery but the market could go in either direction. One saves you some money, the other blocks you from completing a property purchase. That's a very unfavourable risk-return combination.

chrismac1

If you see some of my earlier posts, based on the market performance since 1960, 4788 was within 3% of the ultimate bear market low with 90% probability. Google Schannep Dow Theory for more details.

I was lucky when the UK banned short selling in banks that I'd just closed out a short position. There is no real effect, it's just political posturing. What it means of course is that as soon as the ban is reversed there is a queue of bears waiting to short, in this case you can still short the Euro banks in the UK and US so utterly pointless.

Short sellers in my view - far from being pariahs - perform an important and necessary role in the markets. Who else is going to puncture the unsustainable bubbles that - if left unchecked - would do even more damage to the real economy than they already do when they collapse in a heap?