Kind of a self-serving thing to say at his trial, but he has long made it known he dislikes the practice.

https://www.msn.com/en-us/autos/news/elon-musk-made-sure-the-jury-knew-that-short-sellers-weren-t-a-seller-of-small-stature-during-the-tesla-shareholder-trial/ar-AA16zRY8?ocid=msedgdhp&pc=U531&cvid=2011becb00584ca0b48ce86f99cc4af3

I brought this up a few years ago after it was rumored that a few Arabs got rich by shorting NY stocks just before the 9/11 atrocity, but at the time most on this board seemed to be happy with normal buy/sell stock markets and did not seem interested in starting one where shorting was not allowed.
And then there is currency, remember how Soros broke Britain?
The basic dilemma is that shorting tempts investors to harm their investment long term in order to make a short term profit.

Rongagin71 said:

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I brought this up a few years ago after it was rumored that a few Arabs got rich by shorting NY stocks just before the 9/11 atrocity, but at the time most on this board seemed to be happy with normal buy/sell stock markets and did not seem interested in starting one where shorting was not allowed.
And then there is currency, remember how Soros broke Britain?
The basic dilemma is that shorting tempts investors to harm their investment long term in order to make a short term profit.

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Get that but it just seems like a slippery slope. Where does it stop?

brah

themissinglink said:

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as long as it's factually accurate, I don't have a problem with it.

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Whatever the heck that means. As an example, Tesla, which actually makes a product out of matter, has a market cap of $450 billion or so, and $26 billion in identifiable assets. Vegas Lines on football games are factually accurate. Stock prices, more like a roulette wheel with a hyperdrive button called Twitter and an accelerator called the printing press.

XpressAg09 said:

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DeLaHonta said:

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Why should taking short positions be illegal?

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Because this guy will try to blow up your airplane to sabotage the stock.

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These guys would like a word…

Days before the Oct. 7 Hamas attack on Israel, stock traders magically began anticipating events to come:

Research by law professors Robert Jackson Jr from NYU and Joshua Mitts of Columbia reveals MASSIVE short-selling leading up to the attacks:

The short-selling before Oct. 7…

— Charlie Kirk (@charliekirk11) December 5, 2023

Information asymmetry.

JSKolache said:

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Only in Finance can you sell something you dont own. In every other sector that's labelled fraud. It's not transparent and is a compliance/clearing nightmare. You didn't own it, but you sold it ... how many others sold it too? 2x? 10x? No thanks.

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Kind of odd way to look at things. You're selling a promise to deliver at a future date.

I bought an item the other day that was out of stock. I bet somebody bought a house to be finished in 6 months, too. The other party understands the terms of the contract (or should!) so I don't see the issue.

I do see some having "issues" with the concept of short selling, due to the increased opportunities for market manipulation. (i.e. it's easier to create panic than euphoria, and it's easier to sabotage than to build.)

TX AG 88 said:

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JSKolache said:

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Only in Finance can you sell something you dont own. In every other sector that's labelled fraud. It's not transparent and is a compliance/clearing nightmare. You didn't own it, but you sold it ... how many others sold it too? 2x? 10x? No thanks.

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Kind of odd way to look at things. You're selling a promise to deliver at a future date.

I bought an item the other day that was out of stock. I bet somebody bought a house to be finished in 6 months, too. The other party understands the terms of the contract (or should!) so I don't see the issue.

I do see some having "issues" with the concept of short selling, due to the increased opportunities for market manipulation. (i.e. it's easier to create panic than euphoria, and it's easier to sabotage than to build.)

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Lol.

Lots of businesses sell products or services they don't have, then after the sale, they go out and make the product or build the team to provide the service.

Any item going on pre-order, Tesla is a great example. Or any of the start-up rocket companies selling payload delivery to orbit despite not having a launch vehicle in a state that can deliver.

Kickstarter is another example of selling something you don't have. It's a commitment to deliver, that's what short selling is.

Short selling serves a couple of critical needs in the market
1) it allows people to run a market neutral investment book, if they choose
2) it exposes financial misdeeds way better than the SEC does
3) this one is one people don't think about but it is a massive hidden benefit, in a market crash/freefall, the only natural buyers are shorts looking to lock in their gains. In 1987, it kept Black Monday from being even worse. Similar thing in late 2008.

Shorts serve a purpose. I do agree naked shorts shouldn't be allowed. I also think market manipulators putting out false reports (both those short and long) should be prosecuted.

JSKolache said:

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Only in Finance can you sell something you dont own. In every other sector that's labelled fraud. It's not transparent and is a compliance/clearing nightmare. You didn't own it, but you sold it ... how many others sold it too? 2x? 10x? No thanks.

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You actually take ownership of it by borrowing it for a fee from the current owner. That owner has the right to call it back from you at any point (assuming you don't have a OTC contract) forcing you to liquidate or borrow from someone else.

Why do say it is a compliance and clearance nightmare?

I'm in commodities and the past two years I have been taking on a lot of short positions whether it be the basis or futures and it has been paying off. But most of the time it is better to be long and wrong than short and sorry.

In a healthy, rational market based on tangible asset valuation, short selling is an indicator of inflated value, and helps restore normalcy. In the insane chaos of today's market though, it's all too often used as a form of gambling at best, or theft at worst.

Stmichael said:

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In a healthy, rational market based on tangible asset valuation, short selling is an indicator of inflated value, and helps restore normalcy. In the insane chaos of today's market though, it's all too often used as a form of gambling at best, or theft at worst.

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How is it theft and how is the gambling any different on the long side vs the short side other than losses are capped one side and not the other?

Kansas Kid said:

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Stmichael said:

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In a healthy, rational market based on tangible asset valuation, short selling is an indicator of inflated value, and helps restore normalcy. In the insane chaos of today's market though, it's all too often used as a form of gambling at best, or theft at worst.

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How is it theft and how is the gambling any different on the long side vs the short side other than losses are capped one side and not the other?

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Theft in the case of hostile shorting with the intent of crushing a company with volume, or other such underhanded tactics like slander. Gambling in the sense that the losses are undefined, and can get people in serious trouble.

Stmichael said:

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Kansas Kid said:

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Stmichael said:

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In a healthy, rational market based on tangible asset valuation, short selling is an indicator of inflated value, and helps restore normalcy. In the insane chaos of today's market though, it's all too often used as a form of gambling at best, or theft at worst.

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How is it theft and how is the gambling any different on the long side vs the short side other than losses are capped one side and not the other?

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Theft in the case of hostile shorting with the intent of crushing a company with volume, or other such underhanded tactics like slander. Gambling in the sense that the losses are undefined, and can get people in serious trouble.

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Slander can be addressed via litigation. I think there are a lot fewer issues of this vs the long version of pump and dump which the stock meme craze has made a lot easier to do along with the use of options.

So if you are worried about people getting in serious trouble, where do you stand on using margin accounts/leverage? I know a lot of people that have been killed by that. Then there are the levered ETFs which in general, I violated my caveat emptor mindset and believe in most cases should be banned.

There are a lot of ways people blow up such as day trading and investing in high risk, speculative stocks along with leverage. You don't hear of many stories of the average Joe blowing up shorting because that isn't their typical game and their brokers stop them out before they totally blow up.

Kansas Kid said:

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Stmichael said:

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Kansas Kid said:

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Stmichael said:

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In a healthy, rational market based on tangible asset valuation, short selling is an indicator of inflated value, and helps restore normalcy. In the insane chaos of today's market though, it's all too often used as a form of gambling at best, or theft at worst.

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How is it theft and how is the gambling any different on the long side vs the short side other than losses are capped one side and not the other?

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Theft in the case of hostile shorting with the intent of crushing a company with volume, or other such underhanded tactics like slander. Gambling in the sense that the losses are undefined, and can get people in serious trouble.

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Slander can be addressed via litigation. I think there are a lot fewer issues of this vs the long version of pump and dump which the stock meme craze has made a lot easier to do along with the use of options.

So if you are worried about people getting in serious trouble, where do you stand on using margin accounts/leverage? I know a lot of people that have been killed by that. Then there are the levered ETFs which in general, I violated my caveat emptor mindset and believe in most cases should be banned.

There are a lot of ways people blow up such as day trading and investing in high risk, speculative stocks along with leverage. You don't hear of many stories of the average Joe blowing up shorting because that isn't their typical game and their brokers stop them out before they totally blow up.

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I don't advocate that it should be banned outright. Just under certain circumstances, like malicious action or naked shorting like others have mentioned.

As for margin trading, there's minimum requirements for trading on margin, as well as defined risk. That's a lot easier to account for than unrestricted naked shorting.

Stmichael said:

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Kansas Kid said:

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Stmichael said:

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Kansas Kid said:

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Stmichael said:

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In a healthy, rational market based on tangible asset valuation, short selling is an indicator of inflated value, and helps restore normalcy. In the insane chaos of today's market though, it's all too often used as a form of gambling at best, or theft at worst.

---

How is it theft and how is the gambling any different on the long side vs the short side other than losses are capped one side and not the other?

---

Theft in the case of hostile shorting with the intent of crushing a company with volume, or other such underhanded tactics like slander. Gambling in the sense that the losses are undefined, and can get people in serious trouble.

---

Slander can be addressed via litigation. I think there are a lot fewer issues of this vs the long version of pump and dump which the stock meme craze has made a lot easier to do along with the use of options.

So if you are worried about people getting in serious trouble, where do you stand on using margin accounts/leverage? I know a lot of people that have been killed by that. Then there are the levered ETFs which in general, I violated my caveat emptor mindset and believe in most cases should be banned.

There are a lot of ways people blow up such as day trading and investing in high risk, speculative stocks along with leverage. You don't hear of many stories of the average Joe blowing up shorting because that isn't their typical game and their brokers stop them out before they totally blow up.

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I don't advocate that it should be banned outright. Just under certain circumstances, like malicious action or naked shorting like others have mentioned.

As for margin trading, there's minimum requirements for trading on margin, as well as defined risk. That's a lot easier to account for than unrestricted naked shorting.

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We agree on naked shorting. As for malicious trading, there are already rules against that but the key is it needs to apply to longs and shorts. Too often, it seems to be applied only to shorts.