David Weidner’s new column (out tomorrow) proposes outlawing the sale of any stocks for a loss.

Very clever!

Cox: But I was getting a pedicure the other day and I thought, ‘Why not just short selling?’ What about ALL selling?’ Why not make a rule that prohibits selling a stock for a price lower than the last trade. We’d stop losses altogether. Everyone would make a profit. Unlike some of these other measures you’ve heard today, it wouldn’t cost taxpayers a penny. So, what do you think of the Cox No-Loss Sale rule?

Source:
The no-loss sell rule
What if we tried a new strategy in the next six months?
David Weidner
MarketWatch, 12:01 a.m. EDT July 31, 2008
http://www.marketwatch.com/news/story/heres-trading-rule-guaranteed-work/story.aspx?guid=%7BCAB604A7%2DDEEF%2D4DF7%2D9389%2D2B71BFB86436%7D

Category: Finance, Short Selling, Video

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

24 Responses to “The “No Loss Sale” Rule”

  1. Oh that’s just too cool! He’s done a great job of explaining the absurdity of recent actions taken to “stabilize” markets.

  2. CNBC Sucks says:

    Yep, Caleb. And can we also make it illegal to go long on oil futures?

    I love Larry Kudlow’s “free markets” at work. Good luck, capitalists.

  3. Jojo says:

    Very good! [lol]

    Pinch me. This should be onion territory, not so close to reality.

  4. Isn’t Congress basically doing this for real estate?

  5. PHB says:

    Brilliant, absolutely brilliant! This not only solves our problems with the esteemed financial sector, thinks of the implications once applied to my tech holdings, my typewriter holdings, hell, even my horse and buggy stock will benefit. But why stop there, if I can’t sell my “investment” properties in Florida unless I make a gain, this crisis is all but over! OMG – so simple, so elegant, and yet so practical! He better hurry up with the clever Go Daddy site or his opportunity to capitalize this idea will be gone! Wait, he doesn’t care, his gains are locked in! Perhaps there is even an application here for Heaven?

    My life is changed!!

  6. Sean says:

    It’s satirical right? I assumed so but the deadpan way he ended gave me doubts… but it has to be a joke, right? The alternative is too frightening to consider. Is this what the ‘land of the free’ has come to???

  7. Steve says:

    Can we make it retroactive to 2000?

  8. Jeremy says:

    Reminds me of the old saying back when I was a market maker — if you never drop your bid you’ll never lose money. Never seemed to work though….

  9. Frederick says:

    Better be careful, or Barney Frank and Chris Dodd will take you seriously.

  10. me says:

    Put me down with Sean.

  11. Greg0658 says:

    hum … the only way you would lose is paying taxes on the 1 cent gain … oh and inflation in the system from investment day to sale day

    in this privatize profits and socialize losses world (via bankrutcy) … I think it makes sense … then again I’m a band kid not a jock

    I wonder on the main “Matrix” theme, some days … would life suck without competition? Everyday is fuzzy wuzzy? But still I think the Star Trek Starship Enterprise will not launch from this world system.

  12. mangy cat says:

    isn’t that what the islamabad stock exchange regulator had ordered?

    no way, paqistan was infinitely more flexible, allowing 1% daily falls
    until it took the floor from the punters’ feet

  13. Jonathan says:

    I *think* this was a joke and will go with that, but if this were actually brought to fruition, I don’t think anyone would actually invest after the first few days. Can you imagine having your money locked in a worthless stock until it gained if you made a bad investment?

  14. Greg0658 says:

    Jonathan imo – if a stock was no longer wanted by an investor, the company would be required to pay back the investor the principle, on demand in a time period accepted as proper to business and investors

    imo – should slow down phoney companies and promote real business plans and slow down the operation of the Corporate sovereign fund printing presses

  15. DDK says:

    With a high enough inflation rate, this can be a nominal reality!

  16. John Doe says:

    Hilarious! BUT … someone please explain to him the difference between “short selling” and “naked short selling”. Too many people seem to be confused about it – deliberately – I’m sure.

  17. Chuck Ponzi says:

    Jeebus,

    I feel like the only one who’s insane in this room.

    Remember… NAKED short selling was always illegal, they just started enforcing it for 19 stocks.

    BR, I’m sorry, but after yesterday’s gratuitous use of an anecdotal b/d’s inability to find shares to short (probably because of a misinformed agent, not a conspiracy) has taken my opinion of this blog down at least 2 notches.

    What’s wrong with enforcing something that people shouldn’t have been doing anyway? How would you feel about a cop pulling someone driving a tank down the freeway over? It’s illegal and dangerous. Just because the SEC hasn’t gotten off their fat duff to do what is right and force settlement, doesn’t make them bad for doing it now.

    This has turned into a real groupthinktank, and it seems the writers/commenters missed the point completely to naked short selling.

    Chuck Ponzi

  18. Jonathan says:

    Chuck Ponzi:

    The video these comments are about is not referring to outlawing naked shorts (which are already illegal), but rather eliminating selling stock at a loss, period. If you buy stock at $50, you would not be allowed to sell it until it was $50.01. That could be a real problem if a stock went below $50 after you bought it, never to return. It would cause you to lose all fifty bucks, rather than being able to sell at $35 and only lose fifteen bucks.

  19. omodes says:

    I can’t believe I actually heard this. companies would then have access to their own version of the printing press via dilutive share offerings. Also share price does not change the fact that a company may be going bankrupt because someone has to buy the share offering. I am stupified. Google to 12 trillion market cap one share at a time.

  20. CJ says:

    What a dumbed-down world we’re living in. You can’t do satire without first broadcasting the Humour Warning. You can’t use the Socratic method of teaching when the students are too stupid or ideologically blinkered to give obvious answers to easy questions. And you definely can’t use the Modest Proposal method of rhetoric because too many people will take you literally. It’s like the whole world has become a sort of remedial or ESL classroom.

  21. Greg0658 says:

    just in CNN 8:10et
    (in 60 second sound bites)

    1> the “Race Card President Dollar Bill” story
    2> Obama points out GM hitting the skids – ExonMobil best quarter ever in business
    3> Exon is down 5 on news they missed expectations
    11Bil actual – street expected 12Bil
    4> all 3 anchors smiling and off to the weather

    switch to imho
    Exon missed expectations of gouging Main Street by +1Bil and Wall Street sells it off? WHAT? Is that true? Did you all mean to do that? Or is it just the play of the day, so its all cool?

  22. Greg0658 says:

    ps – you’all know this .. but I remind you

    If you are try’g to put them out of business by driving down the stock to zero … they will just be buy’g up their own stock on the way down, make’g themselves private … then they don’t even need to share dividends with you folks who put them in the cat bird seat

  23. Greg0658 says:

    ps – on “eliminating selling stock at a loss topic”

    the business and you the investor would not be stuck in a situation because under this scenario the corporation would (should) be able to sell someone else stock at a lower price giving them the capital return to give your investment back (possibly needing to borrow $ at a bank for the difference)

    unless they are no longer a darling of a corporation and will be required to perform a friendly bankruptcy