May 4, 2009
Short selling in general is wrong. People should only be able to sell what they actually own. Assuming that Short selling is not going to be banned it really needs controls put in place. Limits are not really enough, why should someone be able to short sell ahead of someone trying to actually sell the stock? Limits would only slow down the destruction of value caused by the current short selling.
Given that the up-tick rule lost some bite with the change to decimal pricing it should be brought back with added protections also. Perhaps like the other proposal where short sell must be at or above actual stock sell prices. Market wide rule triggers would still be subject to abuse of individual stocks.
Short selling is nothing more than gambling and it winds up making all investing gambling when investing should be a way for people to accumulate wealth. Short sellers only have interest in seeing a company's value drop while investors are interested in seeing a company build value and the stock price is just part of that.