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Strategies & Market Trends : Stock Attack II - A Complete Analysis
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To: Trumptown who wrote (19901)9/24/2001 11:25:34 PM
From: Tradegod  Read Replies (1) of 52237
 
I've wondered if shorting is really an "efficient market" tool or not. One could argue that it artificially increases the shares available for sale since these shares theoretically do not belong to the shareholders. While I like to look for overvalued shares to profit from a correction, I've witnessed stocks get unmercifully punished by powerful shorts to force negative momentum. AEOS last year comes to mind. It was driven from 35 to 8 (which also matched it's PE reduction) only to return and make a new high when they were done. It was painful and illogical to those who (like me) thought it was reasonably priced at 20.

On the other hand, to temporarily outlaw shorting would be a license to print money for the momentum longs. It would be like a return to the OCT 99-MAR 00 timeframe when essentially shorting was illegal for all practical purposes, :) . It would only collapse when rumors of an expiration date of the window would surface.
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