"When you say that it is merely a way for people to make money then isn't that what you intend to do when you go long?"
Of course, but I'm not saying I'm doing it because I want to add liquidity to the markets.
"I did not agree with this observation in the original post either, Short selling is in fact the practice of selling a persons property without their knowledge. When people buy stock on margin it is not exactly their right to prevent it from being lent out to short-sellers."
First I didn't make that statement. Let's be clear about that.
However, strictly speaking, people may NOT know when their stock is being loaned out, I don't know how the procedure of it works. I know this: You sign an agreement, required of course, and this allows them to borrow stock from you. Then: Whether or not they actually notify you each time its done, I don't know. If they don't notify you, then you could say you really don't know, even though you're aware of the overall possibility it could happen.
Whether or not the agreement should be required is another argument. The sec or nasd or whoever is in charge of these types of things, state laws? could always say that brokerage firms can't make this a requirement to open a margin account, just as they say you don't HAVE to have credit card insurance to have a credit card. (or if that's not a proper example just use one where the authorities do come in and make their presence known concerning what can and can't be done)
Buying stock long on margin doesn't create shares, but selling short stock does.
So, IMO for this privilige of creating shares, short sellers should be required to have stricter rules to follow than they have in place already. |
