If the stock was being hammered by short sellers and nothing was truly wrong with the company, the insiders of the company would step in at a level and start accumulating shares. Since Lehman was not worthy of proping up by insider buying at any price, there is essentially a vacuum under its current price which explains the collapse in prices.
how can company insiders defend against a group of large hedge funds with literally 100s of billions of dollars? if even GS were getting taken down, how could anyone possibly defend themselves?
Don't worry. If SEC does ban short selling, all the big Wall Street firms will be exempt from the rule. That's how it was with the last ban on shorting financials.
It can't happen. it is technically impossible. but, why? Why are they considering it at all? It is so out of character.
I'm calling bullshit on your bullshit call. If LEH stock was undervalued at $3, then why didn't somebody offer to buy it over the weekend? The reason should be obvious: LEH was not even worth $0.
banning short selling will not happen. without shorts there wil be no volume resulting in no commisions for everyone. there will just be bid/offers but no transactions. however, changing the rules on naked short selling might happen.
exactly.and it was these same guys from those firms you mentioned that put pressure on Cox. Cox isnt to blame, he was between a rock and a hard place.Remember, he has to protect his job too. hedge funds should have known better.I mean, to gang up and short the daylights out of a tech company or something, but banks?they overstepped their bounds there.
Words of wisdom. If the stock market doubled nobody would be calling for regulation of long positions, saying it was a "crisis of overconfidence," etc. etc. Only when the market goes down, i.e. corrects for past excesses, do we hear this kind of nonsense.
Oh? I didn't know hedge funds could launch a bear raid on the Dubai Investment Authority. Like I said, nobody in the world wanted to buy LEH, at any price. The fact is that these companies destroyed themselves. Every one of them. For months they've had access to government money and have been helped along at every turn by the ratings agencies (LEH debt was rated AA until the day it went chap 11), by the SEC, and by their ability to manipulate public information. If a company still fails despite all this it must be a real shitter. To all the short sellers who figured it out in time, I say good trade. They took on a lot of risk for a big reward, shorting a big Wall Street bank down to $3.