April 10, 2009
Greetings,
I wanted to comment on the issue of short selling. I was greatly concerned about this practice starting last year when I began to understand how it worked (and seeing the devastating results. There are some basic ETHICAL questions about why the practice is/was allowed to exist. I have heard various arguments in favor of it, but I'm not sure how one justifies a situation where when a company is struggling, investors make a PROFIT on their loss. And if that doesn't seem unfair enough, our profit from their unfortunate situation puts more financial burden on the company and potentially causes them greater losses.
I know this is a simplistic view, but I believe investors should be entitled to share the profits and good fortune of the companies that we support, but we should not be able to turn huge profits from, and be complicit in their potential demise. That is tantamount to kicking someone when they are down, which nobody would disagree is unacceptable behavior.
The modified uptick rule and circuit breaker sound like very good ideas to implement. It has been frustrating to see GOOD and PROFITABLE companies have their stock prices driven into the ground by pressure from short sellers. Hopefully these proposed changes will help avert that.
Thank you.
Dewey Long