May 7, 2009
THE SHORT SALE RESTRICTIONS THAT WERE IN PLACE SHOULD HAVE NEVER BEEN DISCONTINUED. NOR SHOULD THERE BE NAKED SHORT SALES. THERE ARE TOO MANY LARGE INVESTORS AND HEDGE FUNDS BY THEIR SHEAR BUYING POWER CAN MANIPULATE PRICING TO THEIR ADVANTAGE, DRIVING PRICING DOWN TOO QUICKLY AND DRAMATICLY. THEY ALSO DO THIS IN TANDEM WHICH IS SUSPECT OF COLLUSION. NORMAL MARKET PRESSURES WILL DETERMINE PRICE OF A STOCK, WHETHER UP OR DOWN IN A CONTROLLED MANNER. THESE RESTRICTIONS WERE PUT IN PLACE AFTER THE CRASH OF 1929 BY THE VERY PEOPLE WHO MANIPULATED THE PROCESS PRIOR. ECONOMIST TALK ABOUT A CONTROLLED LANDING, THE END RESULT MAY BE THE SAME BUT YOU SLOW THE PROCESS DOWN WHICH ALLOWS ALL INVESTORS A LEVEL FIELD. THIS ALSO KEEPS CONFIDENCE IN THE MARKETS.
THE STUDY DONE IN 2004 WAS INACCURATE OF ITS FINDING BECAUSE BULL MARKETS DO NOT DRIVE SHORT SELLING. I WOULD THINK THE STUDY OF PREVIOUS BEAR MARKETS WILL SHOW THEY WOULD HAVE BEEN WORSE IF THERE HAD NOT BEEN RESTRICTIONS IN PLACE AT THEIR TIME. REINSTATE PROVEN RULES.