Comments on: What is Short Selling, How it Works, and the Risks http://www.moolanomy.com/867/what-is-short-selling/ Personal Finance. Investing. Wealth Building. Thu, 09 Feb 2012 18:55:29 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Pinyo http://www.moolanomy.com/867/what-is-short-selling/#comment-17553 Pinyo Wed, 24 Sep 2008 13:30:34 +0000 http://www.moolanomy.com/?p=867#comment-17553 @TML -- Thank you for the additional points. I agree that the elimination of uptick rule allows short selling to be exploited more readily. @TML — Thank you for the additional points. I agree that the elimination of uptick rule allows short selling to be exploited more readily.

]]> By: Dividend Growth Investor http://www.moolanomy.com/867/what-is-short-selling/#comment-17536 Dividend Growth Investor Tue, 23 Sep 2008 21:24:05 +0000 http://www.moolanomy.com/?p=867#comment-17536 TML, I actually agree with you that one of the reasons behind the severity of the current bear market declines lies in the fact that the uptick rule for selling short was discontinued. TML, I actually agree with you that one of the reasons behind the severity of the current bear market declines lies in the fact that the uptick rule for selling short was discontinued.

]]> By: Mr. ToughMoneyLove http://www.moolanomy.com/867/what-is-short-selling/#comment-17528 Mr. ToughMoneyLove Tue, 23 Sep 2008 15:53:52 +0000 http://www.moolanomy.com/?p=867#comment-17528 Two additional short selling issues that are worth mentioning: (1) naked short selling (not borrowing or arranging to borrow the shares) has been illegal but poorly enforced by the SEC; and (2) the elimination of the "uptick" rule in 2007 made it easier for large institutions to sustain negative momentum in support of their short positions. I think you might see the return of the uptick rule and (I hope) more vigorous enforcement of the rule against naked short selling. Two additional short selling issues that are worth mentioning: (1) naked short selling (not borrowing or arranging to borrow the shares) has been illegal but poorly enforced by the SEC; and (2) the elimination of the “uptick” rule in 2007 made it easier for large institutions to sustain negative momentum in support of their short positions.

I think you might see the return of the uptick rule and (I hope) more vigorous enforcement of the rule against naked short selling.

]]> By: Pinyo http://www.moolanomy.com/867/what-is-short-selling/#comment-17523 Pinyo Tue, 23 Sep 2008 14:21:30 +0000 http://www.moolanomy.com/?p=867#comment-17523 @DGI -- Thank you. I've added the clarification. @DGI — Thank you. I’ve added the clarification.

]]> By: Dividend Growth Investor http://www.moolanomy.com/867/what-is-short-selling/#comment-17522 Dividend Growth Investor Tue, 23 Sep 2008 14:14:34 +0000 http://www.moolanomy.com/?p=867#comment-17522 I have done short selling and I have lost a lot of money doing it. Nice overview by the way. I liked this part: "Since you don't own the stock, you are responsible for paying the lender any dividend during the course of the loan. If the stock splits, you'll have to buy back twice the number of shares." However I think that you might want to add that you will have to buy back twice the number of shares, but that their prices will also be half of what they were prior to the split. Some novice investors might think that's an overlooked market inefficiency :-) I have done short selling and I have lost a lot of money doing it. Nice overview by the way. I liked this part:

“Since you don’t own the stock, you are responsible for paying the lender any dividend during the course of the loan. If the stock splits, you’ll have to buy back twice the number of shares.”

However I think that you might want to add that you will have to buy back twice the number of shares, but that their prices will also be half of what they were prior to the split. Some novice investors might think that’s an overlooked market inefficiency :-)

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