Registered User
Joined: 4/18/2005
Posts: 4,090
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I often get my worden reports a day late because I update my charts before they are written, And usually don't read most of them any way. I work my system and it works for me.. Too Much Information can only be confusing and time consuming anyway. That said I do skim them for anything interesting... However todays (rather yesterdays ) was entertaining. I don't know where to begin to even approach some of the remarks made.
Selling short is "damaging" ? Isn't that what ken Lwas trying to claim? But in the end his stock was worthless for a reason... and those savy enough to see the writing on the wall made a nice proffit.
Selling short is "illogical"... well if it makes money how illogical is it? Considering the concept that price tends to fluctuate around "Value" there will be times when over entheausiasm drives prices to high and panick drives prices to low. For those who understand it, both trips can be proffitable. It's a "ballance" concept. Reguardless of Shorting prices wouldn't just go up. Generally prices fall for a reason ... there is something fundamentaly wrong with the company.... Selling may become over entheausiastic....but for the savy that creates oportunity.
Selling short is "Immoral" and the "Product of Greedy WallStreet Manipulators..... who control wallstreet and the Government". What is the business model you would have THE WORLD run on? Disney World? this is business... it can be quite usefull for hedging during over bought markets, or during recessions. Which by the way would come reguardless of shorting or not.... why can't those who understand the concept make money in a bear market? I din't know I was an immoral person. I know wallstreet guys (manipulators?) that are devout christians.... they short.
Shorting was, as I understand around as early as the early Japaneese rice tradeing markets, who had the idea of "futures contracts", as early as the 16th century. At one point in their history for every unit of available physical rice there were many times that in contracts being traded. That's markets and economics.
The remarks about "no other premise in life where you can sell something that does not belong to you with out your permissio"... is just an illeducated statement IMO. First of all I'm not selling Johnys shares... I'm BOROWING shares from my broker and selling them. But you can sell things that don't belong to you yet in this society. Buy a car in a custom color and trim prackage... The dealership sell it but then they gotta build it. Have work done on you'r home... the contractor owes you work but you probably paid for it first. When a company offers their shares for availability on the open markets they understand that some of those shares will be shorted. Not all stocks are available for shorting but a company generally knows if they are shortable and they don't have a choice, but they never generally know about it.
"The whole point of selling short is to 'hammer down' a price"....but the people who hold that stock may want to hold it over time in HOPES that it will go up". This is called investing... and stocks have fluxuations. The down draughts come for a reason... the shorters would loose their shirts if they didn't have grounds to short on. YOu cant just manipulate a price quite that easily. If you cant stand the heat get out of the kitchen, buy CD's. Shorters aren't wrecking your portfolio as badly as your bad stock picking abilities are aparently. Holding and hoping is never a good idea... but if you are a long term investor in a company then the dips are generaly considered to be buying oportunities for accumulation over time. This is GOOD for you... it means more shares bought lower, and a lower cost basis.
"Buying calls and puts is less damaging than shorting"?
If you bought a stock and it takes a dip that you aren't comfortable with dumpit. If you buy a PUT and exercise it or sell it proffitably to someone else what happens? if anything that is more immoral, because you get to "put" the stock (and its loss in value)to someone else while you keep last months proffitable exit price! How is that not "damaging" to the market, considering that the person on the other end of the trade is probably taking a fairly heavy loss? In the end it is all factored in any way... options premiums take stock price and direction into account anyway... so what are you talking about?
"Sell Shorters" don't have any power and secret alliances with the SEC. I short some times and I was never asked for membership dues to the club! The Uptick rule was eliminated because it was useless would be my guess. I have been quite proffitable shorting and 1) I'm not a wallstreet powerful person from a market minority. I'm trading on less than 50K and live in the middle of Iowa! 2) I never knew it existed till it was abolished and I can't see any difference in my bottom line! Abolishing Shorting will not prevent recessions...Business cycles, busniess decisions, and global economic cycles all dance togeather to create the Waves that we see in the market(but you would understand that being a "financial adviso"). IBM wasn't trending down before the home computer wave because of sell shorters. They were trending down before the 90's becasue their leadership and management didn't see beyond the mainframe computer and then thought that the idea of the average person wanting a home computer was rediculous to them.
"There were many good companies out there that took years to build, employed thousands, which were destroyed by sell shorters"....... the sell shortes can't sell with out a good premise. Ken Lay tried to say the sell shorters were killing his company, but who was killing his company? All those share holders were robbed by the sell shorters? Ford's stock price in the last few years has all been because of sell shorters? People were getting laid off becasue osf sell shorters?.... you wouldnt' say it was because most american car manufacturers made their biggest and greediest stake in the big SUV craze and then gass prices shot through the roof. Meanwhile Toyota and Honda were proffitable becasue they had an inferior product that didn't last as long as a good Amade car and got terrible mileage? Sell shorters can't drive a company out of business. If sell shorter get prices to far down "Smart Money" will be all over the oportunity. People are laid off becasue of business cycles and bad leadership and foresight... to much bad leadership and companies fail and go under. If the company is worthless so is it's stock. The wallstreet "manipulators" have acess to much more fundamental information than the average guy will ever see and if that information fortells rising proffits then the "manipulators" buy and they buy allot and eventually it shows up in price action.
"missing a few Quarterly reports" can be a serious thing. The copany is not proffitable.. so their stock is valued at less... if they keep it up that is called operating at a loss. Would you BUY stock from a company that is operating at a loss? My guess is NO.. you're gonna look for a company with good, smart leadership and that knows how to make money ... because when they are making money their stock is going up. I wonder what kind of financial advisor would suggest buying a company that is not proffitable?
"eliminating selling short" is not going to save companies... as an "Investment Advisor" i'm amazed that these remarks can come from you. I'm just a guy trading out of my house with no college but all of what you are saying makes no sense to me. How can it eliminate volitility (which makes me good money on the long side)and calm down inflation and reduce national debt?. It would bring STAGNATION! it would make investing in the stock market about as proffitable as a good money market. Eliminating selling short is not going to create an economic utopia where all your investments just go up and up and never down.
As an investment advisor with those thoughs and concepts it seems to me that you don't know or are not very comfortable with your business. I would suggest that you buy a lawn mower and a pickup truck and go make an "honest" living.
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 Gold Customer
Joined: 11/11/2006
Posts: 359
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Now, remember Folks, DW said "I personally disagree with almost every word of the article."
It was posted in fairness to those with different views.
Although I do not short sell, as a concept, I agree with DW. I will add my voice to yours.
As well as the posters that are critical of the author of the article.
I do not get the sense that DW is being criticised in this instance, and that is as it should be.
Lets not shoot the messenger. (Although there seems to be a lot of dead messengers lying around).
Mammon
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Registered User
Joined: 4/18/2005
Posts: 4,090
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I was not directing anything at Don Worden...but that there are "Financial Advisors" that can articulate such a wierd view just makes me feel bad for the millions of "little guys" out there that know enough about the market to know they need someone acting on their behalf if they stand 1/2 a chance... but don't know that that their guy could be bonkers.
I personaly learned that through (big brokerage chain to remain nameless) when my portfolio was stagnant for two years and my agen kept sticking to his guns and I was making no money and actually loosing in a bull market. I figured I could do that much my self... so I started doing what I thought necesary to learn.. and by the end of the year I turned a decent proffit.
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Registered User
Joined: 10/7/2004
Posts: 264
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I have to agree here. The following stuck out in my mind:
"There are many good companies out there which took years to build and which employed thousands of people, that were destroyed by short sellers when the company ran into some rough times or even just missed some quarterly estimates. The owners of the stock were probably willing to hold on and ride it through. Not enough of them were selling to cause a total collapse of the company. It's the short sellers, who for their own personal greed, sold something they didn't own and had no rights to, and drove the company out of business. This causes tremendous damage to our economy, to the workers, and our country, all for the greed of a select few."
Let's have some real examples! How do short seller's destroy a company? Maybe they can take the stock down, but not the company itself. Only the company can do that. The stock market is a secondary market and is distinct from the companies themselves. Companies can have poor business plans and be selling for $100s per share (think internet bubble). Or they can be good companies churning out profits but not in a high growth mode and have a low stock value. Neither has to do with how good the company is run and its future success. Good luck.
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Registered User
Joined: 4/18/2005
Posts: 4,090
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Bethleham steel??? They were killed by their overly generous retirement plans..... Before long they were working to suport all the retirees.
I guess you could mak ethe argument that short sellers can HELP put companies in positions for hostile takeovers I guess... BUT then again the victim company would generally recognize their predicament and do something... announce a reverse split... make an investment to increase debt... or some other strategy to drive away the buzzards. If they dont... to me that falls under the poor leadership.
Darwin works if you think about it.. even in capitalism and in business. I mean really WE are all biological individuals and it is our decisions that make up the market and the business world etc etc. HMMM something to think about there. Perhaps there is a thesis there for some accademic armchair philosopher.
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Registered User
Joined: 5/2/2007
Posts: 59
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Those good companies are in to make money too, right? Say one's Anticipated Move does Happen the way one expected,who gain?
I noticed a stock takes forever to go up, but how long does it take to tumble? it could take a stock 6 months to go up 15 points but on a bad day it can take fall 20 points, based on that i think that if one is in the game to make money then yeah shorting is good, better yet sell naked puts(gotta have the cash and experience).
I was taught and this is me, "if it looks bad short it" i don't know about you guys but with the current condition even my Bullish scans are pulling up shorts.
A lady with a teaching company was telling us (claims) how she and her sister back in 2001 as intermidiate traders were able to become millionaires shorting ENRON.
Shorting is good, in my view,very good,people making big $$ shorting, never talk about it(join the sympathisers) People are in this to make money, shorting just happens to be one of the many way to play the markets.
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Registered User
Joined: 5/2/2007
Posts: 59
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This is one Merciless game where emotions are not accounted for.I just read the latest Worden note(9/11)and it confirms my view towards shorting, follow "the big boys" Hedge funds in this case, only that i can't Day trade yet.
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Registered User
Joined: 4/18/2005
Posts: 4,090
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"I noticed a stock takes forever to go up, but how long does it take to tumble? it could take a stock 6 months to go up 15 points but on a bad day it can take fall 20 points"
I think in general this is true ..but it also depends on the market.. I've seen stocks have that kind of up day also. The thing is it takes volume generally for stock prices to rise... but they can fall on lasck of volume or buying interest or from selling pressure. Also the newer system of stoplosses probably contributes more to the sudden down draughts than any sell shorters... becasue as the price tumbles fear and panick spreads making rational people behave like rats on a sinking ship. as price falls it also begins to trigger the stops and picks up momentum.
BUT generally speaking there is generally more upside pressure over time on any given stock. I think this is probably becasue 90% of people tend to think in terms of "UP" reguarding the market. Pluss there are probably allot more "Investors" than traders out there... many of whom make their monthly purchase for their IRA, 401K or whatever.
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Registered User
Joined: 4/18/2005
Posts: 4,090
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Oh by they way... Spending 250 milliion dollars a day in Iraq has nothing to do with the economy but abolishing selling short will save us all ! Just rediculous. i don't know why this artical enflamed me so much ..
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Registered User
Joined: 5/1/2007
Posts: 158
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I just do what the voices (charts) tell me to do. Does one need 25K or 50K to short these days? Maybe he got widows and orphans into a mortgage broker or commercial paper.
Anyone remember the Japanese property craze of the late 1980s? The land for the Japanese royal palace in Tokyo, if sold at that time, would have cost more than all of California! The big bubbles in 2007 are Chinese companies and expensive real estate - both because of massive liquidity. In one recent month, the Chinese people took out 380 billion dollars (U.S.) to buy stocks - often on margin.
In the U.S., the home equity loaners are sweating. I'd rather have foreign than U.S. equity as oil is at record prices only in U.S. dollars. Massive deficits in both government and in many households are at the core. Two ways out: deflation, like the Japanese from 1990-2000, or hyperinflation. And so far, it doesn't yet look like hyperinflation (except at gas pump).
Also, short sellers have been losing shirt since 2002 to the exhuberant longs. Oh, I just sold a long position today; awaiting interest rate drop - I think it's going to be 1/4 not 1/2.
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Registered User
Joined: 4/18/2005
Posts: 4,090
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I won't care what it is really. Most of my postions are purely technical for now... what ever they do will create movement and really my main strategy seems to procuce me a few proffitable long trades for the next day reguardless of market conditions USUALLY.
so long as you are aproved for margine you can sell short... it's not usually a mater of dollar value. I never hold shorts open for long periods of time... the odds are against you there PLUSS there is the short interest and if the stock has a dividend then it's another caution .. so I get in and get out and re-evaluate for another try.
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Gold Customer
Joined: 11/11/2006
Posts: 359
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I agree with Scottnlena that other factors are involved than short-selling.
U.S.A uses 22 million barrels of oil per day.
Oil at 78.00 a Barrel
$1,716,000,000 per day. Most going overseas, to people who hate our guts.
Thats 68 X Iraq.
Mammon
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Registered User
Joined: 4/18/2005
Posts: 4,090
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I just read an article on the history of the uptick rule. I'd past the whoel thing here BUT I pay for that periodical and I don't theink they would apreciate it.
But the stance that selling short is "immoral" aparently comes as a product of the battles between Vanderbilt and Dew(?). The latter was a short seller (the activity of which existed at the inception of the stock market)and called a bear... he was also suposedly fairly unscrupulous in the days before the regulation that is put on the stock markets now.
Later After the Crash aparently more selling was generated by the rush of pannick selling by the average investor while only a small few (1%) were able to actually proffit from the situation in the crash. the up tick rule was introduced to try to brin investors back to the market inthe hopes that it would help slow crashes....The subsequent crashes show us that it didn't work any way. Also it only applied to intra day trades aparently. however blame for the lost fortunes had to fall somewhere and rather than the average investor who was being courted to re-enter the markets and their lemming like behavior short sellers made a nice scape goat. This has created some false ideas and impressons that last to today in a select number of poorly informed people.
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Registered User
Joined: 9/14/2007
Posts: 38
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Folks the argument makes no sense in either side. The market is a zero sum game. For every seller (short or not) there is a buyer, and for every buyer there is a seller. So what is the point. Yes companies can be taken down by sellers or up to the start by buyers. Remember the dotcom era. PE's meant nothing, in fact the higher they were the more folks would buy. They weren't buying fundamentals, they were buying especulation. The same argument is valid for the short side.
Not sure what the deal is.
By the way, the uptick rule is there to protect you from drops as the one in 1929, 87, 95, etc. Not for any other reason.
Shouldn't ir worry you that most ETF do not honor such a rule. No wonder 200, 300, or 400 points swings are not unusual anymore ah!
good luck
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Registered User
Joined: 4/18/2005
Posts: 4,090
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"No wonder 200, 300, or 400 points swings are not unusual anymore ah!"
I see that as a good thing... creating oportunity.
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Registered User
Joined: 9/14/2007
Posts: 38
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Never said swings are a bad or good thing. In fact the swing doesn't matter, what matter is what you do with it.
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Registered User
Joined: 3/26/2006
Posts: 7
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Wish I was here to discuss this when this thread was active.
I agree with scottnlena that most of the articles concerning the end of the uptick rule are over exaggerated and fear mongering.
We have (or are) gone though a period where credit markets were unstable this is the only reason for declines and volitility.
Prices fall faster because fear is a greater emotion then greed.
Shorts on a up or down tick add to the future supply of buyers.
Manipulation by "insert entity here" is the cry of the weak who fail to take resposibility for thier errors.
The current market structure is much different from '87 and comparisions are unfounded and untrue.
If you are a technical investor or trader best not to worry about these issues. Like others have said etfs have been shortable on a down tic for some time. You should only concern your self with how these changes may effect the patterns you use to base your decisions on.
NISH
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Registered User
Joined: 4/18/2005
Posts: 4,090
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"Manipulation by "insert entity here" is the cry of the weak who fail to take resposibility for thier errors"
Well put NISH. I was recently at a Rotary Club meeting (didn't join) that hosted a local congressman as speaker and we were able to ask questions and suggest requests. One guy was complaining about the volitility in recent markets and things the govt. should do to look into smooting it out. I later aproached the speaker and said I make my living from that volitility and that to my point of view these things move in cycles ... If a person cant take that aspect of market investing they should play "safer vehicles" moneymarkets, mutualfunds etc. It amazes me how so many people want a predictable clean agressive up trend always ! ! !
Obviously the guys investments are hurting now or are wildly all over the place because he has little knowledge of what he, or his advisor is doing.
Though mine have been up and down allot lately to ... I at least know why and accept that to trade now is higher risk than other markets.
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