May 29, 2009
Please allow me to explain how I see how the current stock market works:
Hedge Companies a, b and c collude to buy puts on stocks x,y, and z. Now they use short selling and naked short selling to drive the stock price down forcing the price of their puts up and/or hitting their ridiculously cheap stock put strike price. Near the time the put strike price is about hit they buy calls noticeably higher. Now they cover their shorts forcing the price back up, way up. They cash in their options next month, sell their naked calls and make bundles of cash.
This is not what short selling was meant to accomplish Normal short selling allows for liquidity in the market and allows people to make money betting on failing companies. Without the restoration of the uptick rule the a fore described market manipulation will continue and drive average investors from the market.
These are the investors that work all day and contribute faithfully to their mutual funds each month. These are the same investors that have seen their INVESTMENTS destroyed and capitalism made a mockery of.
Please, I beg you, restore the uptick rule with a three cent "tick".
If you have read this far I thank you for reading my comments.
Ted Kinney