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The blame may be pinned on ETFS if it happens, t the mechanism described in this article is really a regulatory construct that creates a type of short selling t
by lzw 16y ago
The blame may be pinned on ETFS if it happens, t the mechanism described in this article is really a regulatory construct that creates a type of short selling that is problematic. Maybe it might also exist in a free market, but it is protected by regulation now.
- borism 16y agoyeah, I don't think the blame actually lies with ETFs. It's naked short selling that is culprit again. I would not theoreticize whether it should be allowed in free market, the fact is it's illegal. However it might not be practical to demand all shorts to deliver or cover now, but I think if they're not willing then each and every one's financial positions should be assessed so that they have enough liquid assets to do so later.
- BrentRitterbeck 16y agoCulprit of what? There's nothing wrong with the markets at the moment. They don't go straight up.
- borism 16y agoculprit that is the topic of this discussion which is "ETFs: The next crash?" as far as I can tell? Have you read the article?
- BrentRitterbeck 16y agoYeah, I read the article. Naked short selling would have nothing to do with this. The parent ruled out ETFs and substituted naked short selling for the cause. You could view my post as highly sarcastic. EDIT: Maybe I should clarify further. The next crash will not be because of anything related to ETFs or any type of shorting. The next crash will be the result retail investors having unrealistic expectations about how fast the market will rise. The 1990s and mid 2000s set unrealistic expectations about how fast the market will rise. When retail investors are not pulling off double digit returns, they claim things are rigged and leave the market. This is what will drop the markets again. I say we're looking at another major downturn in about two years.
- borism 16y agoNaked short interest has nothing to do with naked short selling? Would you then like to explain what has anything to do with this? I find this issue highly important, so I wouldn't expect "highly sarcastic" comments of very high use. EDIT: the article is not about "The Next Crash". It's about the hidden risks associated with ETFs.
- BrentRitterbeck 16y agoI read the parent's comment differently.
- joe_the_user 16y agoThe article explicitly says that EFT's are a way to achieve naked shorts. Whatever you think will be the next crash, naked shorts are key topic in the article.
- deleted 16y ago[deleted]
- mattmaroon 16y agoWell, the blame doesn't lie in ETFs per se. I mean, the people running the ETFs have done nothing dangerous or wrong. But the way ETF shares can be created allows people to naked short a much larger number of shares safely. So this would not happen with, say, Microsoft stock, but may with a large index ETF.