July 24, 2008
I have been truly disappointed by the SEC's decision to only enforce naked short selling rules against a few select entities in one sector of the market.
The SEC is supposed to act in such a way as to ensure transparency, fairness, accuracy of information and enforce laws and rules for and on everyone. We get enough bank-friendliness from the Federal Reserve. We know who their master is. The SEC is supposed to be of, by and for everyone.
I'm annoyed that the SEC seems to be making a distinction between enforcement of naked short selling rules against a few select banks, and the market at large, when naked short selling OF ANY KIND is already illegal
I have invested in companies that are growing earnings, recording record growth, and hammering Wall Street expectations. And in that time I have seen those companies' stock prices plummet as much as 100% or more of the level they were some 2-3 months ago. What changed? Certainly not the companies. Not the demand for the products they sell (one of them just reported earnings yesterday and blew away the Street by 70% stock price barely moved by the way). What changed is that the rules on short selling you can't naked short financials anymore, and since you can the rest of the market, it basically made financials unshortable. At the same time the financials needed to raise cash and so they do that by selling their winners the same companies I referred to earlier.
What the government has done with regard to Fannie and Freddie is borderline criminal. Is this what I and my co-workers are fighting for the ability of the government to socialize losses while privatizing profits for a few select banks that have collectively fleeced the nation out of more money than I will ever see? Or is it the ability of the Federal Reserve to increase the money supply to keep their buddies afloat?
Free markets work, better than anything else ever tried. But right now the United States doesn't have one.