Posts filed under “Short Selling”
Very short note today, as I have just got back to London and need to get back into the swing of things. Will start writing my daily notes from next Monday. Over 800 banks (523 previously) subscribed for E529.5bn of the ECB’s LTRO funding – slightly above expectations of around E500bn, but, in my humble…Read More
Market Declines: Is Banning Short Selling the Solution?
In response to the sharp decline in prices of financial stocks in the fall of 2008, regulators in a number of countries banned short selling of particular stocks and industries. Evidence suggests that these bans did little to stop the slide in stock prices, but significantly increased costs of liquidity. In August 2011, the U.S. market experienced a large decline when Standard and Poor’s announced a downgrade of U.S. debt. Our cross-sectional tests suggest that the decline in stock prices was not significantly driven or amplified by short selling. Short selling does not appear to be the root cause of recent stock market declines.
Furthermore, banning short selling does not appear to prevent stock prices from falling when firm-specific or economy-wide economic fundamentals are weak, and may impose high costs on market participants.
Hat tip FT Alphaville
> Stock investors may take days to distinguish real news from noise, according to Federal Reserve Bank of New York. This is especially true these days, given false announcements of bailouts, Fed interventions and rescues. They tend to cause fake short squeezes that temporarily spike markets, only to see them ultimately head lower. To get…Read More
I always laugh whenever I hear anyone say eejit hack claim “No one saw it coming!” This video — featuring a thinner, less gray version of your humble blogger — discussing the coming housing storm in 2005 gives lie to that claim. The advice: Sell banks, Sell Home Builders, Sell Home Depot and Lowes. Video…Read More
Carson Block of Muddy Waters spoke to Bloomberg Television’s Erik Schatzker about Sino- Forest earlier today.
Block said he is still short Sino-Forest and that he isn’t a “ninja assassin” who brings down stocks. He thinks of himself as someone who is “protecting investors.”
I don’t understand why, but I keep seeing portfolios strewn with Ultra-Short inverse funds. These are the ETFs that bet 2X and even 3X that major indices will go down. 20, 30 even 40% of some accounts are laden with these. Please stop. Eventually, the downside bet will be a moneymaker. Eventually. But if you…Read More
I’ve been doing the slow burn on a very foolish article in Tuesday’s NYT Dealbook, about European Short Selling rules. The author is somewhat clueless about shorting. He writes: “Companies have long complained that short-selling can lead to stock manipulation. In the financial crisis, managers at Bear Stearns and Lehman Brothers accused large investors of…Read More
I know Whitney Tilson from our Street.com days. He is a smart guy, and a very good Value manager. But like many value guys, he can be early (on trading desks, they call that “wrong”). In his January letter to investors, he discusses some of his recent shorts that have not worked out (see PDF…Read More
“The Chinese delegation has said all week that there will be double-digit growth for years to come and the Brits have lapped it up. But the data doesn’t add up. We think we’ve experienced credit bubbles over the past few years, but China is the biggest. And yet the global economy is looking to China…Read More