America Under Siege: The End of Innocence Message Board

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Politics : America Under Siege: The End of Innocence

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To: joseph krinsky who wrote (5862)	10/2/2001 10:00:04 AM
From: Patrick Slevin	Read Replies (2) of 27666

No, I understand that you did not make the original post. I mentioned it only because I overlooked it in my first post. As far as the rules involved in lending stock are concerned, the broker has no requirement to notify you or I, as holders of margined stock, that they have lent it to a short seller. As far as the topic of short selling adding liquidity to the markets is concerned, on this we will just have to agree to disagree. I believe short selling does add liquidity. Very often when we buy stock it is shorted to us by the brokerage house itself. People bid and offer at the same time merely to make the spread. Without such a process the spreads would certainly be wider. Short selling is natural in Commodity markets. Without Short Selling those markets would not exist in the form that we know them today. Speculation would dry up completely in my opinion. Not everyone who sells short is a bad guy, they just may be rapping a company that is badly managed. Looking at it the other way, when Buyers find a good company that was heavily shorted the Sellers are driven out and the stock tends to run. It's the mirror image of the same argument.

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