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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: SI Dave who wrote (91047)	3/17/2005 3:35:20 PM
From: Nazbuster	Read Replies (1) \| Respond to of 122088

OT: Dave, why are messages suppressed when an ignored party is NOT the AUTHOR of the current message, but is the author of the message to which the current message is a reply?

To: SI Dave who wrote (91047)	3/17/2005 4:09:25 PM
From: EL KABONG!!!	Read Replies (3) \| Respond to of 122088

Hi Dave, The problem with your example is that you "face the consequences" at some point in time after failing to deliver the services or goods. The naked shorts are alleged to never have to face the consequences, because the broker(s)/brokerage(s) involved never call in the short once the 3-day delivery period has expired. That's the allegation anyway. Where the actual truth lies is anyone's guess. My own guess is that selected given broker(s)/brokerage(s) never force a buy-in from some of their customers because if they did, they (the brokers) fear losing the customer, and if the customer is one that generates lots of fees and commissions... I personally think that the naked shorts theory is vastly overblown. Yeah, it's possible that some of it exists, maybe even likely given an unscrupulous broker and a customer that pushes the envelope, but I really don't think that the average Joe-Six-Pack can do this stuff without getting bought in. EK!!!

To: SI Dave who wrote (91047)	3/17/2005 5:25:00 PM
From: Jeffrey S. Mitchell	Respond to of 122088

If you want to read a very informative debate on the issue, check out: Message 21144773 - Jeff

To: SI Dave who wrote (91047)	3/17/2005 6:15:00 PM
From: rrufff	Respond to of 122088

Dave, I think you may be missing part of the debate. There is a difference between shorting and naked shorting. There are statutes and regulations promulgated thereunder and rules of exchanges, all of which have prohibited naked shorting in equity markets for decades. In my opinion, the real issues revolve partially around an "edge," the ability of hedge funds, wealthy individuals and market makers in using loopholes, not available to you and me, as small retail investors. They also touch upon the reason for markets. Markets serve to develop capital and not primarily as gambling resources. (The cynic in me realizes that many of us are really gambling and that reality is something different from the theory. However, we can't just simply call the whole thing a big gamble and let the big money screw us pathetic gamblers. If so, we go back to the days of the trusts and short scamsters of the 1920's.) It is a policy of our government to have free, open and fair markets, with access to information and ability to trade equal to all. Further, our equity markets have a principal function to serve as a resource for capital development. Our history is one of encouraging the raising of money so that entrepeneurship continues as the engine that drives our economy. That is the theory and that is what is behind securities laws, regulations and rules. Naked shorting can kill developmental companies, companies with temporary problems and give an unfair edge to certain investors. Have you read the CEO of Overstock.com and his very clear and convincing discussion of this issue? Message 21134938 In the case you compare, if you sell me something for future delivery, if you don't do it, you will be subject to the consequences of a breach of contract and perhaps equitable relief would lie for specific performance. Naked shorters do not borrow the shares. They turn equity markets into little more than a gambling casino, one that only admits the wealthy, the crooked, the hedge or the overseas scamster. All IMHO.

To: SI Dave who wrote (91047)	3/26/2005 6:37:58 PM
From: RockyBalboa	Read Replies (1) \| Respond to of 122088

Though many comments have been posted earlier (which I've read only in part), some more thoughts on it: Shorting naked is much like selling a stock future. If I for example sell an AMZN future (or any other single stock future), no one asks me whether i can borrow the stock or not, not today, not tomorrow and not in 2 weeks. At the expiry date I may elect to roll the contract over or buy it back (delivery might be a theoretical option, but currently less than 1% of financial futures are delivered on expiry). As you said i simply enter into a contract to deliver something in the future with no settlement need today or tomorrow or in 3 days. The good I have to deliver may exist (like in common stocks) or not, as in most commodity futures where the crop needs time to grow until the declaration date or the hogs ain't slaughtered yet. Yet some differences may exist: when i sell a futures contract, i enter into a liability with a defined amount of goods to be delivered at a certain date and with a certain price (this plays in particular a role in currency or interest rate contracts). In selling short a stock there is much less of a definition - be it naked or with a borrow, in both cases the open position or the stock loan is "on call", much like an american stock option which can be exercised long before the expiry. Yet this difference is again pretty meaningless, as a futures contract can be rolled over again and again for an indefinite time. But remember - the delivery or "call in" issue is not something which distinguishes selling short with a borrow from selling short naked. In both cases the holder of the short position faces the same risk of not being able to maintain a position on a continuous basis. The embedded optionality is something which does not go away easily: the buyer of a stock can demand delivery of the cert; the seller of a stock is obliged to do so on call. All said, the issue seems to boil down to contract law and proper documentation. Free enterprise yes, religion no.