A company like that would, in my opinion, never be naked shorted. I think infinite supply is an exaggeration, but it is a fair point. It just seems to me that if there is legitimate value in the company, the naked shorters will eventually be taken out of the game.
What purpose does naked shorting serve? I looks that there is none, why not abolish it then if it is such evil.
Since it is illegal, it should be abolished. In its current form it is probably used to either deviously manipulate the price of a stock downwards or it is a response to the fact that so many people want to bet against a company because of its lack of quality, that they have to naked short (aren't enough shares to borrow for everyone's appetitie).
Interesting, Retief, you bring up 1929. This is how the white trash of Boston got their trust fund going - well, this and bootlegging. The twenties saw huge Bear Raids by the likes of old Joe. Overwhelm a stock w/bad news and fake shares. How'd that turn out? Investment pools, they called them. You morons will say, "well, it worked out in 15 years or so. What's the big deal?" It's why FDR chose ole Joe to head up the SEC, where you got the acts of 33 and 4 to stop such nonsense. People saw where it led. Now, they just ignore the laws meant to stop such things. When you jump, boys, watch out for parked cars. It's the polite thing to do.
can someone bring me up to speed..I was at a retreat this weekend and really dont want to read the whole thing.. this looks like a juicy debate...
the only time it is legal is for LEGITIMATE market makers to provide liquidity. this does not include hedge funds. the true villians are the prime brokers and their networks.
has nothing to do with my statement. naked shorting is allowed for market makers providing liquidity... not hedge funds.