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Politics : Formerly About Applied Materials
AMAT 301.11+6.9%Jan 9 9:30 AM EST
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To: Math Junkie who wrote (51567)9/6/2001 12:48:13 PM
From: BWAC  Read Replies (1) of 70976
 
I'm still thinking about it? Thus haven't responded. I should more than likely do some more thinking.

Legal? Yes. Allowed by margin rules? Yes. Moral? Its legal and allowed so I guess its moral? Right?

I just find the whole thing an interesting concept. Borrowing something you don't own and being able to sell it into the very same market as the actual owner may be trying to sell into at any given moment.

I understand the arguments that it provides liquidity to the market, provides buyers when buyers might not otherwise exist, helps correct, prevent, or adjust overvaluations, etc.

But does it encourage investment in the economy? I'll be damned if I will continue to invest my money, placing it at risk, while someone (in mass downward speculation) borrows my investment and places it right back on the market.

All of which bodes bad for the economy. Bad for the consumer. Bad for the brokers. And bad for companies in need of capital. Bad for savings. Bad for government tax receipts.

I like to use an example away from the stock market. Imagine investing and saving in your mortgaged home and then it is time to sell. (For whatever reason sell to buy bigger, sell due to transfer, sell just to move for the sake of moving) Only you find out that someone has borrowed your title, and is standing in front of you selling your asset, thus driving your investment and sale price down. Would the people stand for this? I doubt it? Yet this very same scenario happens every day with stocks. I wonder why people aren't outraged? I doubt they even understand.

So? All's fair in margined shares and making big money. Thus it must be moral.
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