Wikinvest Wire

An act of desperation? (UPDATED ... again)

Friday, September 19, 2008

I can't remember what it was that was last sold short in my ETRADE account as it has been quite a few years and, overall, it was a money-losing proposition as I recall, but it sure smells like desperation when you see a notice like this one.
IMAGEThe SEC's ban on short-selling for 799 financial stocks (and a similar move in the U.K.) brings back memories of a few months ago when share prices were plunging in Pakistan.

As shown below in this story from Times Online, angry investors took to the streets to protest their reversal of fortune and the government soon cracked down on short-sellers along with the added measure of "setting a floor" for stock prices as reported by MarketWatch in August.
IMAGESo, you know what's likely to happen next in U.S. markets if this short-selling ban fails to stem the tide for financial stocks...

Remember that it doesn't take short-selling to make stocks go down - just regular 'ol selling will do the trick just fine - and when the euphoria of the current rally wears off, investors will still be looking at a very troubled group of financial stocks.

This headline...
IMAGE... could turn into this one ...
IMAGE----------------------------

UPDATE: Friday, Sept 19th, 11:30 AM PST

Apparently the original notice was not having the desired effect, so ETRADE has seen fit to add the little red exclamation point thingy to the left, as shown below.
IMAGEThis all makes perfect sense of course. After the move up by financial stocks in recent days, they've probably been deluged with phone calls from less attentive (and now very irate) customers wanting to know why they can't sell these shares short after having watched their prices rise sharply.

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UPDATE: Friday, Sept 19th, 1:00 PM PST

And now it's gotten a lot wordier. Options expire today - that should complicate things just a little bit more.
IMAGE
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UPDATE: Friday, Sept 19th, 3:45 PM PST

By popular request...
IMAGEThe floor seems to be holding, so far.

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11 comments:

Dan said...

your image links appear to be broken : (

Tim said...

A little hiccup on the server...

Anonymous said...

This is so sad. The empire peaked in 2000 and 2004-2007 were just more false hope based on a house of cards.

Anonymous said...

Some sites are showing a chart of the Pakistan market since short selling was banned allegedly for one month in June (still in place) -- it doesn't bode well.

Anonymous said...

WaMu was up huge today. I'll stick with it for Bank Failure Friday. Let it ride Mr. Dealer.

Anonymous said...

This will allow the heads of the troubled banking houses and other well connected creeps to liquidate their share holdings then the banks can fold

dearieme said...

Does "in the event that" mean "if"?

Anonymous said...

I would like to see a chart of the Pakistan stock market as well. I also feel this rally will die and selling will begin massively within a few weeks. Afterall didn't they ban short selling of Fannie/Freddie and then a few weeks later after that rally fizzled out they took them over.

Tim said...

I found a chart of the KSE - see above.

staghounds said...

Stop, tide, stop! I command it!

Anonymous said...

Is Etrade still a going concern ?
I'm surprised.

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