Porsche crashes into controversy in the ultimate 'short squeeze'

[d000hg]

It's not okay when one turns into the other.

Why?

[AtW]

Why?

Because it happens without permission of people who are involved indirectly via pensions for example. Stock market should have never been allowed to turn into expensive gambling game, ironically computers enabled it more than anything else, well apart from greed of course.

[TykeMerc]

Because it happens without permission of people who are involved indirectly via pensions for example. Stock market should have never been allowed to turn into expensive gambling game, ironically computers enabled it more than anything else, well apart from greed of course.

The Stock Markets have always been a sizable gamble, there's the inherent risk that shares can go down as well as up and that's fine.

What I do have an issue with shorting which is easier to profit from by malicious rumour mongering and attacking otherwise sound companies than it is by accurately predicting market trends.

[AtW]

The Stock Markets have always been a sizable gamble, there's the inherant risk that shares can go down as well as up and that's fine.

I think there is a big difference between risk and gambling. Say crossing road on zebra crossing involves risk that some idiot won't stop, however it's pretty reasonable that people would stop (at least in the UK), now jumping in front of a train greatly increases risk and makes it gambling.

Stock markets server a few important economic purposes that helped grow economy, shorting has nothing to do.

Say in some places counting cards in Blackjack game inside your head is fine, but in others (Monaco I think) you can go to jail for it. Why? Because such people screw up the game, maybe they are very smart, if so they should dedicate time to curing cancer or stuff like that (then I accept they are smart).

The ironic thing is that hedge funds got themselves so exposed now that they'd get it even if they were totally innocent, which is certainly not the case here.

[TykeMerc]

Actually card counting doesn't have any detrimental effect on the other players since all players at a casino play against the house, what it does is change the odds in favour of the player and so casinos lose their edge.

The Stock Market has always been a gamble all be it an informed one in the case of any wise investor. For example the big pharma companies are mega low risk and so beloved by Pension Fund Managers for their long term low geared low risk returns. Their main gamble is that no clever bugger comes up with a cure for the illness that the pharma company has just spent umpteen millions releasing a paliative treatment for so rendering that investment worthless and affecting the share value badly.
To say that the Stock Market isn't fundamentally a very large and complex casino would be a very narrow view, investors risk their money hoping for a profit by dividend and share price increases.

[AtW]

Actually card counting doesn't have any detrimental effect on the other players since all players at a casino play against the house

What do you think happens if the house loses a lot on some particular game? That game will be withdrawn so other players won't play it OR other players will get worse odds on other games.

To say that the Stock Market isn't fundamentally a very large and complex casino would be a very narrow view, investors risk their money hoping for a profit by dividend and share price increases.

Risk is there fure sure, however the way hedge funds operate causes disruption to normal course of business - a number of companies have failed this year due to aggressive shorting, it certainly helped to bring down Norther Rock and the irony is that the big hedge funds that ended up holding worthless shares as the result of their own shorting game became unhappy when it was nationalised and their shares became worthless.

[TykeMerc]

Risk is there fure sure, however the way hedge funds operate causes disruption to normal course of business - a number of companies have failed this year due to aggressive shorting, it certainly helped to bring down Norther Rock and the irony is that the big hedge funds that ended up holding worthless shares as the result of their own shorting game became unhappy when it was nationalised and their shares became worthless.

Indeed, if you look at this and other threads you will see that I don't support the concept of shorting as it's far too easy to abuse by attacking otherwise sound companies. If the Hedge Funds lose in a dramatic fashion and implode spectacularly I for one won't shed a tear as they appear to me to be parasitical in nature.

[Stan.goodvibes]

ATW,

if you read the whole article you will have come across the bit about Porsche being described as "a hedge fund with a car showroom" and the following quote...

'A year later, pre-tax profits in the year to July 2007 had soared from €2.1bn the year before to €5.9bn, with €3.6bn coming from earnings on stock options trades - more than three times the amount made on selling cars. '

So you got Porsche playing the market and the other hedge funds playing the market, and Porsche won this round.

For every trade that wins, theres a trade that loses. The Porsche deal may have been a bit below the belt, but thats the world of finance for you.

[DiscoStu]

If you honestly think a 99% CGT tax on any short term trades will achieve anything except completely paralyse the market you're sadly misguided...

Shares became chips in a casino, not long term investment instruments - maybe this whole computerised quick-buy-sell stock exchange is the undoing of it, far too many people can trade and far too much effort wasted on these things.

We depend too much on too big companies anyway - this is very bad, so maybe curbing these stock exchange gambling sessions would actually help shift the power back to companies that never even think of floating on exchange.

One thing for sure however - shorting activities should be banned and if some companies primarily do just that, then they should be closed down.

You haven't answered my point. Please explain how a 99% CGT on short term trades won't paralyse the market.

[oracleslave]

Say in some places counting cards in Blackjack game inside your head is fine, but in others (Monaco I think) you can go to jail for it. Why? Because such people screw up the game, maybe they are very smart, if so they should dedicate time to curing cancer or stuff like that (then I accept they are smart).

You were doing well until you used the counting cards analogy. I count cards when playing blackjack for the obvious reason that it improves my probability of success. This in no way influences others sitting round the table in terms of what cards they get.

The point re cancer is a completely separate debate but I would have thought an intelligent Doc/Scientist would be allowed to apply their mind to both activities if they so desire?