August 13, 2008
(1) Short selling by itself is perfectly OK, but NAKED short selling should be banned FOR ALL STOCKS since it can be employed to drive down stock prices artificially without regard to the availability of stock for selling short.
(2) The old UPTICK rule must be brought back. This essentially requires that a stock can be sold short only after an uptick.
Strict enforcement of the above two rules will lead to a healthy market wherein short selling will be allowed and will play a very valid role in the market, but yet it cannot be employed to artificially drive down stock prices by unscrupulous traders.