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It's preposterous to suggest that naked shorts killed Bear and Lehman, as this article does in some places, despite providing the real reasons in others. The na
by mattmcknight 17y ago
It's preposterous to suggest that naked shorts killed Bear and Lehman, as this article does in some places, despite providing the real reasons in others. The naked shorts may have profited from it unfairly and driven the share price down (via the share inflation concept), but the banks were killed by not having the collateral for their insane leverage (and not getting protection from the government). Just because the stock price of a company drops, it doesn't mean it's going out business. This article confuses the sketchy method used to profit from the collapse with actually causing the collapse in many places, usually by suggesting that the shorts are motivated to cause the collapse, but with scant evidence of any connection.
Seriously, Overstock.Com? They're still losing money. The shorts were right.
For the other side of the shorting story, look at what happened everyone shorting VW in 2008 when Porsche upped their stake to 75%. It briefly became the highest value company in the world, as every short seller had their lunch eaten trying to find the few remaining shares to deliver.
- hristov 17y agoThe article actually mentions the other reasons for collapse of those banks. But the article makes it clear I think that naked shorts did cause the collapse as it happened, otherwise it would have happened much slower. Also naked shorts allowed many people to profit unfairly, by doing something that is illegal but it is not properly enforced. Regarding the VW story, were naked shorts even involved in that? I don't think VW trades in US exchanges and I am not sure whether naked shorts are a factor in Germany. NAked shorting should be differentiated from ordinary legal shorting. Legal shorting is not that problematic because there is a natural limit to it. Theoretically naked shorts can crash any company because they can flood the market with an enormous amount of shares.