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Does anyone recall the studies about markets or securities where shorts are banned? I seem to recall that onion commodities cannot be shorted and have a great
by joshu 16y ago
Does anyone recall the studies about markets or securities where shorts are banned?
I seem to recall that onion commodities cannot be shorted and have a great deal more volatility because of it.
- hga 16y agoThere have of course been some since the 2008 credit crisis and the various bans on short selling and according to The Wall Street Journal the effects weren't good (but take that with a big grain of salt). The example of commodity onion trading is supposed to be the classic one showing it's a bad idea.
- elecengin 16y agoThere is no ban on "shorting" onions specifically - it is just not traded on the futures market at all. Gerald Ford pushed through legislation on behalf of onion farmers in the late 1950s to disallow it on the futures market. It has been an example of extreme market volatility ever since.
- riffer 16y agoThis is the main study on the onion futures question. Just be careful, others subsequently came to more mixed conclusions. http://chla.library.cornell.edu/cgi/t/text/pageviewer-idx?c=chla;cc=chla;rgn=full%20text;idno=5033566_4125_002;didno=5033566_4125_002;node=5033566_4125_002%3A6.3;view=image;seq=0019 http://chla.library.cornell.edu/cgi/t/text/pageviewer-idx?c=...