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Politics : America Under Siege: The End of Innocence -- Ignore unavailable to you. Want to Upgrade?

To: DismalScientist who wrote (5528)	9/28/2001 6:25:08 PM
From: joseph krinsky	Read Replies (1) \| Respond to of 27666

I don't think that's a proper way to look at it. You're using one person's transactions.

To: DismalScientist who wrote (5528)	9/28/2001 7:00:29 PM
From: Qone0	Read Replies (2) \| Respond to of 27666

Joe: Can you explain why there is any difference in the ultimate effect of the following two transactions: I buy a stock at 10AM and sell it at 3PM. I short a stock at 10AM and cover at 3PM. When you bought the stock at 10AM your capital provided liquidity to the person who sold the stock. You now own the stock. When you sold at 3PM the buyers capital provided you with liquidity. He now owns the stock. When you shorted at 10AM you increased the amount of capital needed for owners of the stock to sell at the same price you shorted at. Thus decreasing the liquidity of the market for the owners of the stock. When you covered at 3PM you increased the amount sellers needed for buyers of the stock to buy at the same price you covered at. Thus decreasing the liquidity for buyers of the stock. At no time did you ever own any stock. All the capital needed to make your short transactions happen were wasted. That capital built nothing, it invented nothing. If that capital was not wasted in short selling. It could be used and would be used to build and invent. That is the ultimate effect of short selling.