Valentine,
First, a word about my own investing. I do not short stocks or play options. But the underlying reason has more to do with risk than with anything even remotely "un-American" or underhanded.
If you fail to understand the role that short sellers play in the markets, then you have no business investing in stocks. Short sellers are a part of the check-and-balance system that the market employs to keep stocks within realistic valuations relative to their underlying fundamentals.
From your thread header post:
It has come to my attention that SI is riddled with various organizations commited to un-American activities such as shorting stocks. Typically these nefarious people:
Shorting stocks is not "un-American". Shorters are not nefarious.
1.Read SEC documents and use the data to their advantage. (Aren't press releases good enough for these people?)
Gee, are you implying that longs don't read SEC documents and use the data to their advantage? Hint: It's called DD (due diligence). And no, press releases are not good enough for any investor, long or short. Press releases tell investors the story that the company wants investors to believe. Due diligence reveals the stories that the company doesn't want known. Very often, it is shorters that find these more-telling stories.
2.Post negative comments on these stocks. (Yes - on these very same SI boards used for positive comments)
I suppose that there's a point to be made here. Where in the world did you ever get the idea that SI boards are to be used only for positive comments? I'm pretty sure that it's not in the Terms of Use. Did you ever read the Terms of Use before you bought your subscription?
3.Sell stock they don't have. (Yes it could be your stock they are selling - and you don't even know it!).
Selling stock you don't own is the very definition (albeit simple) of shorting. Shorting is legal. And where did you ever get the idea that you should be informed if someone shorts a stock that you're long in? If you're really interested, there's a number of sites that list the MM short interest daily, and a few more sites that show investor short interest as measured through options.
If you don't want your shares of stock shorted, there's even a way you can ensure that. You just take possession of your stock certificates. Very simple. A brokerage cannot allow investor shorting against shares that it isn't holding. Also, some brokerage firms allow you to maintain a cash account (as opposed to a margin account), and these brokerages do not allow shorting against shares held in a cash account. This is true only for some brokerages, not all.
4. Make money while the equity in your stock goes down the drain.
Well, you've stated that as though the shorter has taken money right out of your pocket. Think about it. The shorter borrows stock he doesn't own and then sells it immediately. The proceeds from the sale stay in his account with a brokerage. The short hopes to replace these borrowed shares later (after a steep price decline) at cheaper prices. If he is successful, he pockets the difference between the sale of the borrowed shares and the purchase of the covering shares, less commissions and taxes. If he is unsuccessful, he must ante up any additional costs, but on the bright side, he has a tax write-off.
The shorter didn't take your money. He claimed equity value that would otherwise be lost to all investors when the inevitable price decline occurred. Think about it. If there were no shorters, and the price declines, who profits? No one. And who loses? The shareholders. If the stock was shorted who profits? The shorter. Who loses? The shareholders. The shareholders are going to lose anyway in a price decline, so why would you care if a shorter makes a profit against equity that was otherwise going to be lost anyway? Actually, the person who lost money, was the investor who bought the borrowed shares.
These people must be exposed and stopped - one such group has already been uncovered:
exchange2000.com
But there are more - I am sure of it!. How long will SI allow this to go on?
These people openly discuss their shorts on any number of SI threads. Or at Yahoo or Raging Bull or Motley Fool or AOL (shall I name more?). They're already "exposed". Why would you stop them? Your last inquiry about how long SI will let this go on is so ridiculous that I won't even bother to explain it. Why in the world you think that only longs belong on these threads is beyond me...
KJC |
