5 ms·

Not too many people will defend naked short selling, it is an illegal scam.

by Dilpil 17y ago

deleted 17y ago
[deleted]
j2d2 17y ago
It's perfectly legal. http://www.businessinsider.com/john-carney-why-matt-taibbi-is-dead-wrong-on-naked-short-selling-2009-9 http://www.businessinsider.com/john-carney-why-matt-taibbi-i...
- hristov 17y ago
  Your link said absolutely nothing about the legality of naked shorting. It instead just made a half assed and rather incorrect argument how naked shorting is beneficial or how it is not that different from ordinary shorting.
  - j2d2 17y ago
    It's perfectly legal and the link was for information about how naked shorting works. What was incorrect?
anamax 17y ago
Does this judgement apply to all forms of getting paid in advance? If not, what makes stocks different?
- borism 17y ago
  No. Other party still has to deliver your order and you enforce the delivery vigorously. The speed and extent of stock price changes is what makes them different.
  - anamax 17y ago
    > No. Other party still has to deliver your order and you enforce the delivery vigorously. One expects "no" will be followed by supporting argument. Instead, we see more argument for same. After all, the "other party ... vigorously" is just as true of stocks as everything else. Note that the argument against short selling is actually driven by folks who argue against it because they think that it "unfairly" drives prices down and lets people profit from that. They bring up non-delivery because that's an appealing argument, but it's not a huge problem and it's not what they're trying to stop. Yes, I know about the VW short-squeeze a year or so ago. What of it? (Before you get too excited about the fact that some folks lost a lot of money, make sure that you understand WHO lost a lot of money.)
yummyfajitas 17y ago
It's not necessarily illegal. Nokia, Nintendo and Tesla all openly do naked short selling of their products. They call this a "preorder" -- you preorder a Wii/N900/whatever and they deliver it on or before a fixed date. It's only illegal when you do it to manipulate a market or if you intend not to deliver the shares.
- hristov 17y ago
  Bad analogy. When you pre-order something you agree on the terms. In naked shorting when someone buys a share from a naked shorter in a stock exchange, they do not agree to buy a fake share or a share that will not be delivered. Instead they expect to get a real share. So if the naked shorter does not deliver the share by the end of the three day period it is violation of contract.
  - joezydeco 17y ago
    Also, Nintendo (or the reseller) doesn't charge your card until it ships.
- pbhjpbhj 17y ago
  Nintendo may not yet have the Wii, but they have made some and they are in production. The difference is that Nintendo can complete your order - if it were a naked short sell then the seller knows they probably can not genuinely get hold of the shares that they sold you, it may be impossible, Some other trade may have had a promise to borrow those shares and may have sold them to some other buyer. Nintendo may well actually have stockpiled your Wii already awaiting delivery (I think this is the most likely position).
  - yummyfajitas 17y ago
    Nintendo hopes they can complete your order after they build the wii, and naked short sellers hope they can complete your order after they buy your shares. In the event Nintendo doesn't build the wii, they refund your money. The naked short seller also needs to pay a large penalty. Naked short selling is more or less the same as "naked wii selling". That's why it's only illegal when you are attempting to manipulate the market.

Not too many people will defend naked short selling, it is an illegal scam.

by Dilpil 17y ago

Not too many people will defend naked short selling, it is an illegal scam.

deleted 17y ago

[deleted]

j2d2 17y ago

It's perfectly legal. http://www.businessinsider.com/john-carney-why-matt-taibbi-is-dead-wrong-on-naked-short-selling-2009-9 http://www.businessinsider.com/john-carney-why-matt-taibbi-i...

hristov 17y ago
Your link said absolutely nothing about the legality of naked shorting. It instead just made a half assed and rather incorrect argument how naked shorting is beneficial or how it is not that different from ordinary shorting.
- j2d2 17y ago
  It's perfectly legal and the link was for information about how naked shorting works. What was incorrect?

anamax 17y ago

Does this judgement apply to all forms of getting paid in advance? If not, what makes stocks different?

borism 17y ago
No. Other party still has to deliver your order and you enforce the delivery vigorously. The speed and extent of stock price changes is what makes them different.
- anamax 17y ago
  > No. Other party still has to deliver your order and you enforce the delivery vigorously. One expects "no" will be followed by supporting argument. Instead, we see more argument for same. After all, the "other party ... vigorously" is just as true of stocks as everything else. Note that the argument against short selling is actually driven by folks who argue against it because they think that it "unfairly" drives prices down and lets people profit from that. They bring up non-delivery because that's an appealing argument, but it's not a huge problem and it's not what they're trying to stop. Yes, I know about the VW short-squeeze a year or so ago. What of it? (Before you get too excited about the fact that some folks lost a lot of money, make sure that you understand WHO lost a lot of money.)

yummyfajitas 17y ago

It's not necessarily illegal. Nokia, Nintendo and Tesla all openly do naked short selling of their products. They call this a "preorder" -- you preorder a Wii/N900/whatever and they deliver it on or before a fixed date. It's only illegal when you do it to manipulate a market or if you intend not to deliver the shares.

hristov 17y ago
Bad analogy. When you pre-order something you agree on the terms. In naked shorting when someone buys a share from a naked shorter in a stock exchange, they do not agree to buy a fake share or a share that will not be delivered. Instead they expect to get a real share. So if the naked shorter does not deliver the share by the end of the three day period it is violation of contract.
- joezydeco 17y ago
  Also, Nintendo (or the reseller) doesn't charge your card until it ships.
pbhjpbhj 17y ago
Nintendo may not yet have the Wii, but they have made some and they are in production. The difference is that Nintendo can complete your order - if it were a naked short sell then the seller knows they probably can not genuinely get hold of the shares that they sold you, it may be impossible, Some other trade may have had a promise to borrow those shares and may have sold them to some other buyer. Nintendo may well actually have stockpiled your Wii already awaiting delivery (I think this is the most likely position).
- yummyfajitas 17y ago
  Nintendo hopes they can complete your order after they build the wii, and naked short sellers hope they can complete your order after they buy your shares. In the event Nintendo doesn't build the wii, they refund your money. The naked short seller also needs to pay a large penalty. Naked short selling is more or less the same as "naked wii selling". That's why it's only illegal when you are attempting to manipulate the market.