Shorting stocks during a market crash

{Note from mods - this thread split from here: What's looking cheap on the ASX in 2020? [ASX Shares]}

I am only shorting. Most profitable thing to do

 

Shorting should be banned, forever, period !
Its luducrous that someone who does not own anything can come in and sell my shares from under me without me knowing until 4 days later (delayed short reports) apart from the fact they went down.

Thats as crazy as all this locking up of the worlds economies, crazy crazy!

 

Ah what you’re talking about is naked short selling.

If I short, I already have the stock, because someone who owns it has lent it to me at a price. It’s a free market, surely an owner of a share can do whatever they want. Mind you half these lenders are industry funds, and the interest I pay them goes to mums and dads’ pockets. Why else do you think they’re making their 5-6% return pa.

Also by shorting I assist in creating liquidity and a market. Imagine a stock that is tightly held by a few large investors, you couldn’t even buy any if you wanted to. But if one of the big guys - who doesn’t want to sell- lends me some stock, I can sell it to you. Isn’t that good?

It’s a free market after all and before we talk about banning this and banning that, let’s just remind everyone the sharemarket is not a social service created to help people make guaranteed return.

As a holder of long term companies that I like, I’m more than happy to lend some stock out at the right times to make an extra 10% interest so someone else can sell it. Why not? I don’t plan to sell, why not make an extra 10%? Properties barely return that over long term.

 

I know about it. It still should be banned.
Instos lend out the stock that belongs to other people.
Banning shorting does not guarantee positive returns either, you should not have expressed this and Im sure know better.

Tell me.....did you lend out your stock in the last few weeks?

 

That’s a super knee jerk reaction I have to say

Most professionals and funds short to hedge. Hence the word hedge fund.

If I couldn’t hedge (by shorting travel) then the first thing I do is dump quality companies such as A2 which causes a bigger dip in quality companies. How’s that good for the market, or the investor who’s excited monies are parked in such funds?

 

As far as I am concerned you should be charged for being an accomplice to a crime THE OWNER DOESNT LEND IT TO YOU. Why would they willingly lower the price of their assetts. ? The broker who the owner bought it through in good faith, is acting against the owners best interest and steals it , to lend to some-one else to sell who then sometimes spreads lies to drop the price so they can by it back cheaper and profit at the owners expense.

 

I think perhaps you should look into the ownership rules of things like trusts and pension funds. They don't work the way you seem to think they work.

 

I don’t believe that’s true. The owner lends to you in exchange for a fee and interest payment. The broker simply facilitates the trade. I can pledge my stock to the broker to receive the same fees. You must be talking about the 1980s era in Wolf of Wall St movie. The broker would be in jail if he stole stock lol

 

My very, very basic understanding is the mechanism that allows shorting is effectively the owners of the shares 'lends' those shares to the short seller. A lot of the share owners are very large funds.

I read something recently that suggested that some of these funds have decided not to continue to lend their shares during this crisis. They don't want to make a bad market worse.

 

Unisuper did that.

 

That’s right normally the funds do it. Especially long term holders.

 

So why change the goal posts on shorting at different times?
How is that a consistent therefore efficient market mechanism?
It ludicrous, like this shutdown.
Who decides its "safe" to be in a group of 500 or under but not safe 501 or higher?
The most ridiculous things. Crazy govts/authorities gone stark raving mad.

 

And my "funds" are in those funds!

 

Your funds are probably in an industry super fund, which is lending the stock out, charging 10% interest pa. More than rent you get in most properties probably.

 

Well that's the whole point. Industry super funds are all happy to lend it out and make 10% pa when times are good, and benefit the vast majority of mums and dads, and suddenly... the sharemarket is falling because a) it's overvalued, b) there's an economic issue, c) some of these companies probably have fundamental operational issues but were overlooked when everyone is making money, and behold we want to ban short selling or close the market or maybe even put a few bank CEOs in jail in time.