I think the issue you bring up is not that it's bad for a stock to go down. The issue you bring up is that it is bad to invest too much into a market that would severely affect people's lives and jobs when it goes down. Stocks never going down is a bad thing. Curbing shorting only helps the bubble's capacity to become larger, which always pops. When it pops, it hurts. Therefore, helping the stock price go down on a regular basis (by shorting) is a wonderful thing that contributes to healthier markets. (Healthy as in a less-bloated, more realistic price.) For these reasons, short sellers make a valuable contribution to society. They help keep markets honest.
I know Americans are stupid, but I didn't know Americans are illogical as well. If you are a lawmaker or a company executive, read my purposefully redundant explanation carefully and learn something: A company went bankrupt because of heavy debt, not because of low stock price. A company's stock price has absolutely nothing to do with the survival of a company after the shares are issued. Stock shares are issued by a company to raise money, once the shares are issued and sold in the market, the price of the shares basically has nothing to do with the company per se. The price of the shares becomes a matter for the share holders. In other words, if you hold a share of a company's stock, you are the share holder, it's purely the concern of the share holder if the price rises or drops. A company goes bankrupt because of the negative net income=the bottom line, where the result of revenue minus expense is. If the expense is bigger than revenue, it is a negative net income, that is where the trouble starts. Jesus, the United States are governed by a bunch of idiots, imbeciles and morons in Congress. It's pretty scary that they make laws for over 300 million people. No wonder these law-makers keep authorizing the funding of the Iraqi War year after year, even after we all know the Iraqis have no weapons of mass destruction. What a waste of tax payers' money!
So the problem is not short selling but market manipulation which is bidirectional. A stock's price has nothing to do with the underlying company, except in the rare case the company wishes to issue more shares. But that's why we have manipulation...
Maybe they should just do like they do in the futures market and stop trading if it goes down a certain % or up a certain %.
If Madam Eve bought a stock without some kind of cover , is she not be just as naked as .....if she sold it , without any kind of cover..?
No, not exactly. The concern people have expressed in this thread has to do with selling shares that don't exist. "Naked" short selling, or selling shares you haven't borrowed can lead to that. That's the concern.
more dark pooling,trading via all sort of "trading facilities",even less transparency on markets\exchanges
Thank you Piezoe, i understand the concept of borrowing and shorting. ....i guess i was leaning on the premis that if one bought Enron, which dickhead on the Hill could you go to ....? Another point , what are the HFT guys going to say about this, and how does one borrow an Index , will they do away with futures....? Why didnt they just bring in CFD,s
Spiker, futures, like options, are a contract. The contract doesn't exist until it's created by a transaction, and for practical purposes there is no limit to the number of contracts that can be created on index futures. There may be potential problems with deliverables, but that's a separate issue. With stock however, as you know, there are a definite number of shares in the float.