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Strategies & Market Trends : Are shorters investors ? An ongoing discussion
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To: Wolff who wrote (9)3/23/1999 4:23:00 PM
From: Qone0   of 11
 
Interesting question. To answer this question we must first ask. What is the function of the stock market in the economy?

Is the function to provide capital for business to build a better mouse trap,To increase productivity through new products that the venture capital provides?

If that is true. At first glance shorters are nothing but a leach drawing the life blood of capital from the economy.But there is one function of the market that keeps this from happening. That function is margin. It is the check and balance that keeps the market putting the capital to the company that deserves it.

As shorters sell stock they don't own they provide margin buying power for longs with money they don't own. This is the check and balance.

However when this check and balance is not there on nonmaginable stocks and shortselling takes place. The longs have no margin buying power to check it with. You get a market of wild spikes and dips. Stocks in this market are never properly valued. They are either way to low in price or way to high in price.

Short sellers in this market are not investors, they are leaches. They provide no capital to the economy as the stocks they shortsell can not be used as margin buying power for longs.
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