Rande,
This is not one of my hangouts but a friend asked me what I thought of your issue.
"It is my belief that foreigners [non-American citizens] are taking part in mass naked short-selling of American stocks. Without the underlying borrowed shares, this is known as "naked" shorts. In America, this is an illegal form of short-selling, but foreign brokerages allow it."
It sounds like a lot of nonsense to me. How can you sell short if you don't deliver something (aka borrowed shares)? It's like saying car dealers are selling cars they don't own in order to drive down the price of cars, but they're not borrowing them from nearby dealers to do so. So, where are they getting the cars they deliver to the buyers?
When they close the sale (you know, whoever bought the shares in the short transaction is going to want, uh, delivery) just what do you think they're delivering? Milk? Would you buy shares in the market and then, when delivery day came, accept a smile and a promise that this was done by "a foreigner who did not actually locate the shares for delivery, but his promise is just as good"?
Foreigners may indeed be selling stock, but they are by and large selling out, cutting their losses and repatriating their funds. Is this driving the market south? To be sure. Is it manipulation? I think it's called "voting with your feet."
You know, when markets go down too much (for some people), a few clowns get the idea that if we just restricted short selling then the market would go up again. Actually, since every short is a bona fide promise to buy (that is, btc) it merely provides increased liquidity to the markets. That is a good thing, just go check out some illiquid markets if you don't think so. Start with Jakarta (I've been there) or Shanghai (also been there). It's also amusing that when the markets go up too much (which, see, Naz 5000) we never seem to find kooks who want to restrict "long buying" of securities.
Kb |
