Naked shorting now improper?

I agree they have been naked shorting for a while now, and Jim Cramer just called them out on it. He said on his show for everyone to write to the SEC and tell then to do there job. I agree with this and think it is awesome he said this.

Remember what the late Mr. Carlin said...
"They *own* you."

Somebody better connected and better capitalized then you will *always* win. Doesn't mean you can't get a piece of the pie too, though.

The end result of this is a *major* buy opportunity for SKF over the coming days. Wait till it its moving up and *pile* on!

P.S. The efficient market hypothesis died a long time ago. James Simons pulled the trigger.

Interesting.. I do believe the financials need to bleed out some more but I think the opportunity in the likes of SKF will be tempered by greater separation of the composite stocks. In other words, the market is recognizing that not EVERYONE is carrying poison and some have been oversold.

I have piled into ETFC for this very reason. The customer loyalty is great, the platform unrivaled and the new management sensible. They are still living under the shadow of the bankruptcy rumor/warning by Citi even though reserves are now among the best in the industry. A buyout is entirely possible.

We are only in the second inning of the credit collapse. Two trillion dollars of debt will be destroyed in the coming years. All the financials are gonna get punished in the process; but I will agree that some will weather the storm better than others.

Prime is the new sub-prime its going to take many/most of the big players with it when it collapses as well. Remember that leverage works just as well when applied in reverse and it only takes a few % of non-performing loans to render a S&L insolvent.

Mish has a great write up on this...

http://glob​aleconomican​alysis.blogs​pot.com/2008​/07/selectiv​e-enforcemen​t-of-regulat​ion-sho.html

No surprise to me that the banks pushing the SEC to curb naked shorting are some of the worst offenders historically.

In fact, they were probably engaging on the practice on each other up until the SEC stepped in.

Agreed that the pain will go on further. But I believe sorting out the losers and winners will provide greater opportunity than the indexes -- long or short.

I again reference ETFC. Their reserve allocations are substantial (recent 500 mill sale of ETFC canada did a lot) and they have one thing most of the big banks don't.. a little trading platform that prints them cash.

Back to the macro... In addition to the real-estate swamp, I am also highly cognizant of the declining dollar. The American national debt is now approaching -- or has overshot -- point-of-no-return levels. I have moved heavily into SLV (and bullion) for this reason and that it is an increasingly rare commodity. The collapse of the real-estate markets has crashed into the banks and may cause the overhang of national debt to come crashing down in the form of either hyperinflation or defaults.

Unsettling times but potentially quite profitable.

I remember talk some years back about making short trading illegal altogether and I am for it. this isn't what the free market was intended for. Shorting is a cynical play that in my mind is part of the big market problem. The market was meant for people to lend money to corporations and benefit from their growth. What's shorting anyway?
It's not lending money to a company, it's betting that company will loose. It's a window to all kinds of mischief..
Banks were another hub for this cr%p.. inflating assets artificially so that they can lend more money then their real base allows. rules of the game must be fare.
This is whay I prefer large caps where this shorting scam is more difficult.

Funny how the short traders only get pilloried during a bear market.

In a bull market, shorting pushes strong enterprises *up*. Remember that shorting works both ways for the other end of the trade. I got hammered on shorting the financials last week, for example.

It won't last of course, but its an example of how shorting provides liquidity to the market in the short term.

In the macro, however, its all about the fundamentals.

And thats the problem with the financial sector.

Giving 500k loans to unemployed people is a bad business model.

Marking those same loans 'AAA' is a bad business model.

Insuring those fake 'AAA' loans is a bad business model.

Bad business deserves no business and *should* go under. Short traders help facilitate that process and provide capital to companies with *good* business models.

I'm only a dominantly short trader now because thats where the money is. Thats the nature of the free market and something to be encouraged, not regulated out of existence. That would be the antithesis of a free market.

Anyway, speaking of supposedly free markets, check out another post by Mish....

http://glo​baleconomica​nalysis.blog​spot.com/200​8/07/sec-iss​ues-order-to​-protect-tho​se-most.html

The SEC just lifted the restriction on naked shorting on the very same broker-dealers that are the worst offenders! And they are still protected from it!

Please, if anyone, anywhere, says the US securities market is *free* please point them to that post. This is the most blatant example of market manipulation that I've ever witnessed in my entire life. The market makers have just been given a 'Carte blanche' to bury everybody else for the next 30 days.

Hi V4,
I agree with everything you say. By all means, let the free market roll, but these business practices eventually lead to meltdowns and when it's financial institutions that fall, the government bails them out with MY tax dollars, because they do business with the money I worked so hard to make and save.
I mean here's a sweet business: let's open a bank. Take people's money. Roll the dice while the going is good, take million dollar salaries, payout dividends.. then when the 20 year meltdown comes the government won't let us fall because it's the hard working citizens that will get hurt. This is outrageous!
Shorting may be a liquidity tool and admittedly I don't know too much about how it works, but I know it serves evil men in manipulating the market and harming hard working Americans that naively thought that a stocks price reflects the company's value and all they need to do is pick a company with a bright future and share the profit.
These investors are the reason the stock market was founded in the first place. It should be kept clean. I vote to abolish shorting altogether - there are other ways to make money in a bear market like buying Gold, Silver and Basic consumer products.
But the fed will be the fed, working for the rich man.
I want to see bankers going to jail.
I want to know how Bare Sternes was allowed to over extend itself like that, and I want to know who's answering for the 20 billion of my dollars that my government paid to bail them out.
Cheers.