May 2, 2009
Short sellers have hurt me. I have made money shorting. I have traded the same stock multiple times in one day.
The problem doesn't rest as much with shorting as it does with velocity, churning if you will accept that phrase. When the markets were not computerized before instantaneous information flows the velocity was so slow that one could visible see and react to changes in prices. Look at what happened to DNDN last week. Ninety-seven seconds of mayhem creating many happy and unhappy traders.
The constraints on shorting should be directed at the number of times something can be shorted by an individual then repurchased and then shorted again. Traders that do this create turmoil in the markets to their benefit. They are not looking for a long-term decline in the market. They are looking for the fast buck.
If someone shorts and then buys he should be prevented from re-shorting for ten days. He made a decision to short and recanted. He should not be allowed to recast his short opinion.
Additionally, all short positions should be taxed as short-term capital gains based on to year-end valuation. If the short is held for more than a year it is taxed on the change from year-end to year-end. This is iportanted because those that a have profited by bring our country to its knees should help the governemtn pay for the carnage they have help to create. If action isn't taken before the end of September 2009 the government will lose substancial tax revenur. Taking short a course will make money flow back into the market and lifting stock prices. This will have a positive on banks, life insurance companies and retirement plans. Please take immediate action on this through a recommendation to the US House.
Short positions by concept are short-term investment decisions. They represent what is perceived to be a short-term imbalance in the system. Purchase positions can conceptually be a long-term position.
Another topic that I think you should address is the perceived ability of the market makers to known the book. It is unfair in this day and age. If they have the right to see it then the complete book should be made public to all that want to see it. I feel like I am in Vegas most of the time betting against the house.
As long as I have your attention, I think the $25,000 day trader rules are without merit. The rules class oriented.
My final suggestion that broker should be required to receive permission from their long stock buyers (including street name buyers) on execution of a specific stock purchase whether or not their stock can be lent out to bet against them. If it is lent out that the broker must pay for the loan. The loan of the stock would be callable with three-day notice or sale of stock.
I would appreciate some type of response specific to my comments if possible.
Best Regards