Comments on: The Long and Short of Short Selling

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By: Israel Ujano

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By: Shorting is Fraud

Shorting is Fraud — Thu, 17 Mar 2011 15:02:00 +0000

Let me sell your house which I don’t own, then hope to borrow one back to give the buyer! Tell me if that is legal… all without your consent!

By: Goldman Case Provides Political Advantage | The Freeman | Ideas On Liberty

Wed, 28 Apr 2010 12:52:43 +0000

[...] Timely Classic “The Long and Short of Short Selling” by Warren C. [...]

By: Regulation of short selling Coming Down | The Freeman | Ideas On Liberty

Wed, 24 Feb 2010 13:32:15 +0000

[...] Timely Classic “The Long and Short of Short Selling” by Warren C. [...]

By: Warren Gibson

Warren Gibson — Thu, 21 Jan 2010 03:50:28 +0000

In an ironic twist, your humble author got caught naked this morning. I had allowed a put option on Fannie Mae to expire in the money. The rules say that in such cases the broker must exercise the option, meaning they sold FNM short for me. Then I got a call from Schwab saying they had no shares to lend out and I would have to close the position. That was understandable, and though I was disappointed, I agreed. They closed the position, but for a while there I was technically naked, though presumably still within the settlement window.

By: Chidem Kurdas

Chidem Kurdas — Tue, 19 Jan 2010 19:55:41 +0000

This is a very useful article on a topic that has broad economic and political implications–see above link to ThinkMarkets

http://thinkmarkets.wordpress.com/2010/01/19/bubbles-fraud-government-and-short-sellers/

By: Bubbles, Fraud, Government and Short Sellers « ThinkMarkets

Bubbles, Fraud, Government and Short Sellers « ThinkMarkets — Tue, 19 Jan 2010 19:41:41 +0000

[...] new issue of the Freeman contains an excellent article on short selling by Warren C. Gibson. This investment method – selling borrowed stocks in the expectation of buying them later at [...]

By: irondoor

irondoor — Thu, 07 Jan 2010 18:45:55 +0000

Re your last paragraph: “Those who engage in short-term trading should understand this and be prepared for volatility”. You did not provide a definition of “short term”. To some traders, short-term is a few seconds; to others it may be a few years or longer.

Volatility has exactly the same effect on long-term buy and hold investors that it does on “short-term traders”: the price of their holdings fluctuates.

As an example, assume that an employee over the course of his career accumulated shares of his employer’s stock with the goal in mind to sell it at retirement. Assume that he retired at the end of February, 2009 and his stock had lost 90% of its value. Do you think that he was prepared for volatility?

As a short-seller, I look for volatility. Volatility encourages weak hands to sell their stock. Just one look at a chart of the VIX compared to the S&P 500 will tell you all you need to know.