May 12, 2009
Please help retail investors survive in the market, by restoring confidence that the market isn't rigged against them. The goal here should be to promote market stability, by slowing down some of the more volatile activities. For this, we need both a return of the uptick rule and a ban on naked short selling. I'm not against short selling, but it can be slowed down without damaging any "rights of short sellers" to destroy the capital created by our markets for our society. The markets must exist for some social benefit, not just to be an unregulated exercise in wealth destruction.
The market today seems too manipulated. Specifically, the ability of short sellers to use naked short selling to knock down financial institution stocks (all the while buying credit default swaps on their debt) was flat-out obscene. They'd make money driving a stock down destroying the company's business, then they'd make huge returns on the CDS, often paid by the idiots at AIG (now backed by the American taxpayer). Market observers like Jim Cramer drew a direct line to naked short selling (which appears to have been illegal, but SEC Chairman Cox decided otherwise) and the demise of the uptick rule.
One other thing I've noticed is manipulation of prices on the market. I've seen a security move by 2% within a few minutes, almost never trading, but with 1 buy order and 2 sell orders just a few cents apart. It feels like there's some program trading out there, explicitly seeking for limit orders in the market. Retail investors can't compete with something like this, and it seems like an unfair way of getting orders triggered at potentially bizarre prices.
Problems like the above strongly suggests that Las Vegas is a safer, more regulated place for your money than the NYSE. Please help return the markets to some degree of sanity.