Reply to: Goldman Sachs' sub-prime bet pays off

[AtW]

I agree - but surely efficient markets are important too?

Yes, but there should be a line drawn between attempt to manipulate market (materially affect price through actions) and normal market actions.

Say Soros was clearly affecting the market - he should have been put in maximum security jail for a long time as a warning to future generations that some things should not be done in the markets.

[BrilloPad]

Shorting is just one of the issues. The key issue is short-termism that in my view seriously damages western companies.

I agree - but surely efficient markets are important too?

[AtW]

Shorting is just one of the issues. The key issue is short-termism that in my view seriously damages western companies.

[BrilloPad]

http://www.connect-utah.com/article.asp?r=1689

Quite an in depth look at the issue without being long - good article.

"Though fraudulent, some argue that naked shorting is not itself bad for markets, in that the practice moderates the wild ups and downs of overvalued stock."

[AtW]

Sounded very like it to me. If your position can only be North that it. The market will eventually find the right level.

Market manipulators are acting against interests of the market - market should not allow manipulations of that kind, where as they happen all the time. For starters it should be illegal to sell stuff you don't own - selling "short" as they call it. Secondly worldwide there should be high taxes on any short term gains from playing stock market - long term investing should be encouraged and maybe firms should report details every 1 year rather than quarter, maybe this will take off market pressure from execs who now forced to focus on short term things rather than long term.

[BrilloPad]

No, I don't propose this.

Sounded very like it to me. If your position can only be North that it. The market will eventually find the right level.

[AtW]

Effectively you propose a one-way bet.

No, I don't propose this. If you think some particular market will go down in value, then don't invest into it. However if you think you can force market down by selling stuff that you don't own only to buy it back cheaper and return it to the owners, then it is market manipulation that should be punishable by a very lengthy prison sentence.

[BrilloPad]

It is different - it is open long-term policy so everyone can plan ahead. Say if a hedge-fund declared open policy to buy shares of Northern Rock because they believe it is a great business, then fair enough - however shorting shares they don't own to force share price down in order to buy back shares to return to their real owners is blatant market manipulation. Unlike insider trading this sort of fact can be proven much easier - frankly if you don't own shares you should not be selling them, period. Effectively this is fraud as they sell stuff they don't own.

Effectively you propose a one-way bet. Seems to favour inefficient management.

Mind you some companies short bonds which are about to be issued. I remember one issue where the amount shorted reached 120% of shares to be ussued. So the issue was pulled! tehehehe

[AtW]

But it's no different in principle, except you have the central bank doing it - in fact it is worse because the whole country would be buggered if it comes unstuck! All China's foreign trade is built on it.

It is different - it is open long-term policy so everyone can plan ahead. Say if a hedge-fund declared open policy to buy shares of Northern Rock because they believe it is a great business, then fair enough - however shorting shares they don't own to force share price down in order to buy back shares to return to their real owners is blatant market manipulation. Unlike insider trading this sort of fact can be proven much easier - frankly if you don't own shares you should not be selling them, period. Effectively this is fraud as they sell stuff they don't own.

[TimberWolf]

: FFS it's not difficult...

Funnily enough I didn't spot those spelling errors when I read it first time. Perhaps it's a bit like not being able to spot ones grammar errors straight after writing something.



How many F's are in the following:

FINISHED FILES ARE THE RESULT OF YEARS OF SCIENTIFIC STUDY COMBINED WITH THE EXPERIENCE OF YEARS.

No cheating, and count only once.

[wendigo100]

It's one of the jobs of a central bank to maintain currency levels - this is done in the interest of majority of participants in the market, unlike actions of private banks that screw market participants by manipulating market in order to make money for themselves.

But it's no different in principle, except you have the central bank doing it - in fact it is worse because the whole country would be buggered if it comes unstuck! All China's foreign trade is built on it.

[daviejones]

I believe market manipulation is illegal. The problem is that the authorities are very lax and not applying existing laws. Same goes for anti-mopolies laws that are routinely being circumvented by companies that make exclusive agreements, for example I am ceriously annoyed that Sky gets monopolistic use of Premiership football matches - this kind of arrangement should be illegal as it reduces competition.

: FFS it's not difficult...

[AtW]

Of course shorting happens without owning stocks- that's the whole premise of the trade you imbecile.

I believe market manipulation is illegal. The problem is that the authorities are very lax and not applying existing laws. Same goes for anti-mopolies laws that are routinely being circumvented by companies that make exclusive agreements, for example I am ceriously annoyed that Sky gets monopolistic use of Premiership football matches - this kind of arrangement should be illegal as it reduces competition.

[AtW]

But you have advocated a 90% tax on trading. Isn't that manipulating the market?

No. I advocate 90% tax on short term speculative income - long term share ownership should be encouraged, public executions to make the point is a tad off when it comes to Human Rights Act, but high level of tax is fine. Long jail terms for those who conspire to influence market in order to make money - this primarily concerns people like Soros and now infamous hedge funds.

Naturally this will lead to loss of jobs in the City, one can only hope these people will go look onto finding cure for cancer, maybe even new energy sources, they are smart, right, so surely they will be able to do it?

[AtW]

Yes they do - their bank is manipulating the exchange rate with the dollar.

It's one of the jobs of a central bank to maintain currency levels - this is done in the interest of majority of participants in the market, unlike actions of private banks that screw market participants by manipulating market in order to make money for themselves.