ABS a.b.c. learning centres limited

a case for stock lending

  1. 1,018 Posts.
    Thought I'll start a new thread given the interest.

    Personally, I have to date never borrowed and shorted a stock. But I can appreciate the argument for disclosure of such a transaction. However, I am of the opinion that lending and shorting without disclosure should be allowed. The reason I say this is because:

    There is always a smart cookie amongst the pack who can seen the trees from the woods. It is this smart cookie with balls that will venture out to borrow and short. With borrowed stock, to me its like playing poker, where both players don't disclose their position. The shorter for his/her part remains hidden and company management for its part does not disclose relevant information to its shareholders. Now to change this law in a way that it will force the shorter to show his/her hand is unfair as the company can get into a short term maneuver to squeeze out the shorter.

    So if the law was repealed or changed it is crooked management who will win out in the end. The existence of this shorting law will keep management in the straight and narrow, which is what we need.

    Look, I'm long on certain stocks which are heavily shorted, I understand the risk and invest accordingly. It is extremely unfair to put in place regulation to protect the ignorant.

    Don't blame it on the shorters, it was abc management's incompetence that has led to this situation. It is no point trying to fix a symptom without trying to cure the disease.

    Essentially, I view this as free market capitalism in motion.

    Disagree with me, you may.
 
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