Subject: File No. S7-08-09
From: Chris Grimes

May 5, 2009

I am just a regular consumer, with a regular job. I invest in the stock market and I believe in value investing. I am against the uptick rule for 3 reasons:

1) The markets of today are extraordinarily overinflated compared to the stock market's historic levels. This is bad for me, because it makes it harder during certain periods, to enter the market at all. The uptick rule is largely responsible for this.

2) In free market economies, less regulation is better. Price controls under Nixon were a disaster. Perhaps a number of hedge funds will collude (even unknowingly, via computer algorithms) to put enormous downward pressure on stocks. But if they drive down the price of stocks too far, there will be opportunists waiting to buy. That is the nature of capitalism.

3) I think having the uptick rule abolished will eventually stabilize markets. Hedge funds can play on bad news and drive markets down. But if the news proves to apply only to the near-term, stocks will readjust upward based on positive events that transpire. If stocks continue to stay depressed due to more bad news, then that is the nature of capitalism. In capitalism the truth always prevails eventually.

While the hedge funds are having a good time right now, eventually capitalism will create an answer to the concentrated short selling and find a way to combat it. Let the markets realign themselves.

The real danger lies in a market with unlimited upside and limited downward pressure, leading to a bubble atmosphere as in 1999, when no stock is worth buying at absurd price per earnings ratios. If the uptick rule were abolished in the 1990s, I believe that the market would have shortened the insane bull market and brought stocks back down to earth much sooner.

But then as they get cheaper, investors get interested again and start buying everything in sight, and the shorts have to cover. This shortens the downward cycle. As markets correct themselves, cycles get shorter and shorter and shorter, until you are left with a market that is actually, less volatile, more stable, and priced more accurately.