Comments on: How to Sell Short (And Why? And When?)

By: Nathan Miller

Nathan Miller — Thu, 25 Sep 2008 15:14:46 +0000

If we outlaw short selling, how will Eddie Murphy and Dan Aykroyd get back at the Duke brothers?

By: Dean

Dean — Thu, 25 Sep 2008 12:33:23 +0000

The bit I don’t understand is how do you ‘borrow’ Joe’s shares without him knowing? Isn’t this actually stealing?

By: S

Wed, 24 Sep 2008 21:17:08 +0000

Thanks for this article! I have to understand short selling for a current events test on Friday and our teacher did a horrible job explaining it, but I hadn’t found another source that explained. (not that I looked very hard. The class requires a level of effort I am not willing to put forth, but the teacher did not clue us into that until after the drop date)

By: Benjamin

Benjamin — Wed, 24 Sep 2008 20:58:17 +0000

There are two things to understand here. First is naked shorting where one hasn’t actually borrowed the shares yet. Now against the rules.

The second is while there is tremendous value IMO to the uptick rule, the move to decimals made it very difficult to track. When the spread (the difference between the bid price and the ask price) was permitted to go to a penny from its prior minimum of a nickle, it became more difficult to determine ticks, especially when tens or hundreds of millions of shares trade.

That’s not to say we can’t enforce the uptick rule. I personally like it and believe in the need to allow shorting. But it becomes harder to define clearly in a fast paced, $0.01 market.

By: J

Wed, 24 Sep 2008 20:39:24 +0000

I can’t believe you are able to “borrow” stock from another persons account without them knowing about it. Is it not logical to think that unless you personally own the stock you should be able to do anything with it? If you want to try to short sell, go out and buy your own shares to play with.

By: Morris

Morris — Wed, 24 Sep 2008 18:24:09 +0000

I am amazed that it’s illegal to do “inside trading” (to buy sell stock based on inside knowledge about the stock), but futures and hedging don’t have this requirement.

How is this any different? Both are a conflict of interest and just promote stock holders forcing prices in their favor.

By: Craig

Craig — Wed, 24 Sep 2008 16:06:56 +0000

While you’re at it, why not post some tips on how to make a pipe bomb?

By: Brian Utterback

Brian Utterback — Wed, 24 Sep 2008 15:59:43 +0000

Another reason not to recommend doing this: Under the scenario you give (”Say you know something about a certain stock that nobody else does”) shorting the stock is insider trading under the law and completely illegal. Just selling stock you already own under those conditions is illegal.