Our free(ish) market becomes less free with the ban of short selling October 2, 2008
Posted by Jeff Nabers in : Money, Self Directed IRA Solo 401k , add a comment
A couple of weeks ago, the SEC illegalized a type of investing that makes a market what it is – short selling. Simply put, a person can bet on the market going up by “going long” and buying securities in hopes of selling them for a higher price at a later date. Long positions can be leveraged by margin. A person can bet on certain stocks going down by selling them if he already owns them. The leveraged way to bet on the market going down is to “sell short” which is simply selling stock on margin.
Going long makes prices go up. Selling short makes prices go down. This is part of “price discovery”. Most people don’t even know about short selling or they’ve been convinced to not do it. Securities brokers don’t want people to know about investment strategies that will make market valuations go down because their commissions are tied to market valuations. Their entire system is a mechanism of inflating values to further inflate values.
SEC temporarily bans short selling of companies whose price will go down
Read the official SEC action here. They are, by force of law, inflating the value of the stock market. They are also prohibiting (more…)
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