May 4, 2009
I propose a modified uptick rule that is enforced when a security declines ten(10) percent or more. The old uptick rule will decrease liquidity too much people. We need as much liquidity as possible to get a fair price. Remember, we've had severe bear markets in the early 70's and after the tech bubble and the uptick rule didn't stop that. I believe China's market does't even allow shorting and their market was down over 60% from their peak. . .even worse than our market. I do believe the SEC needs to get their act together and enforce naked shorting as they should have, by law, this whole time anyway. Uptick rules create bubbles because of an upward bias. China's market went to extremes because of this bias. Please do not believe the hype on "Mad Money," as I feel many of the corresponders on this site are misinformed. Markets should go down when fundamentals get worse and not be propped up artificially with an uptick rule. A modified rule sounds like a decent compromise because efficient liquidity would remain. Add naked shorting enforcement and the market would become more stable.