The Trouble with Banning Shorting…
…is that in a capitalist system it will only ever be a temporary measure. Hence it leads to an increase in short-term market opportunism. Look at the performance of those Wall St bank stocks ´protected´ from shorting in the Summer – temporary support until the ban runs out and a massive pay day for the shorters beckons. The new plan, where any stock dropping 20% in one trading session is automatically protected from short selling for the next three, only serves to concentrate the potential timeframe for shorting into either the day of the fall or the day immediately following the 3 day ban.
It highlights the blatantly obvious – it´s not up to exchanges to manage the economy. So they shouldn´t.
Even the buy to hold – short to hedge investors are saying it!
ps Despite being on GAWA duty in the Slovenian Alps, I had to interrupt with a blog post as this is something that really needs knocked on the head. Whatever the governments are going to do about the economy, it´s not the business of exchanges to interfere with market forces.