Worried about a Market Maker borrowing your shares for shorting? You can stop this with very little effort. Just think cash. Think,
"I want to keep my cash."
Check with your broker. Most, if not all, have the same policy on "lending" shares to a Market Market for shorting, lending your shares to a Market Maker to use to steal your money by making a profit on your loss of money.
If you maintain a margin account, one of the stipulations is your shares can be used for shorting. Anyone can borrow your shares and do whatever they please.
Maintaining a cash account, your shares cannot be borrowed. None can touch your shares for any reason.
Cash and carry works well. Borrowing, you always pay a price.
You will discover interesting responses from various brokers. When asked about their policy on borrowing shares, and what would happen if your shares are gone and you want to sell, most will say,
"You will never notice."
I will notice and I will be very annoyed.
When your shares are borrowed and you try to sell, those shares have to be replaced. A notice is sent to the shorter who took your shares, to replace those shares or your broker has to borrow shares from yet another person.
Do you suppose this happens instantly? Is it possible your sell order will be delayed by an amount of time it takes to replace your missing shares?
You might not notice. I will.
Margin account, your shares will be used for shorting.
Remember the "Goon Girl" who was always hitting on Popeye the Sailor, romantically and physically? You know, very tall, skinny, close set eyes, a single eyebrow. She hung out with Bruto, or Brutus, whatever name.
That's me. Well, I am not skinny, by far. I am a goon girl though!
Diana, check with your broker to be sure about their own policy. Pretty sure you will find out your shares can be used for shorting if you have a margin account.
I don't think you will find this in most contracts, save perhaps being buried in the legalese small print.
posted
Were you browsing down in the micro board today PG-- I don't short or margin to protect my Karma--LOL
Posts: 36378 | From: USA | Registered: Sep 2003
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posted
[QUOTE]Originally posted by Purl Gurl: [B]Did I write four foot eight?
SOME HOW I JUST DON'T BUY THAT!!! BUT IT'S YOUR STORY AND I WILL LET YOU TELL IT!!I KNOW YOU WERE A HEART BREAKER AND A WILD ONE AT THAT!!! JUST GOTTA HUNCH!!
posted
i'm with Reality, there is no delay in selling if your shares are borrowed. its standard practice. i dont know where purl got that info
Posts: 1045 | From: novato,ca,usa | Registered: Aug 2003
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posted
secondly-- if you keep up on the general economic news you know that there is a huge amount of margin and short sales on the market-- has been for quite awhile--as that ends--we will see a lot tremors..good and bad--
posted
Purl, I have heard this same thing. There is another way to protect shares, and that is to ask for the paper. Usually there is a fee attatched, but if you are dealing in big numbers and longer term it's negligiable. Get the certificate.
Posts: 65 | From: Oregon coast | Registered: Jan 2004
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posted
Just verified that PG is right as usual--my expensive human broker says not to worry if you have shares borrowed from your account( this is a very large house so you need to look at your own brokers solvency)-- the broker is responsible-but margin account works both ways they can borrow your shares to short sell against you-
posted
Yes, Glassman. Your shares can be borrowed and shorted, costing you money. This happens because margin accounts are so popular with investors, and very popular with shorters.
Have to remember, although the SEC claims no shorting on the down tick is allowed, this rule is not enforced.
Classic game. A shorter borrows 10,000 shares from your account, sells 9,000 at market, then dribbles out 100 share amounts, increasingly lower prices to drive prices down. You see this everyday. The SEC does nothing. I have yet to read a single SEC censor for down tick shorting. This will not happen because Wall Street owns the SEC; corruption.
On time delays, there was a recent incident with a participant here trying to sell and could not. He ended up having to call his broker, who, in turn, borrowed shares from a different account of his to cover for his missing shares.
So, execution time in seconds, or exectution time in minutes or more, when a phone call is needed to cure problems caused by shorters.
There are circumstances, regular basis, you cannot sell your shares because they are simply gone and cannot be replaced within a reasonable period of time. It is not uncommon for shorters to not replace your shares until the three day limit.
Either way, time delay or not, you will lose money if a shorter takes your shares. You will lose money anyhow because a shorter will take shares elsewhere.
Point is, if more people use cash accounts, it becomes more difficult for shorters to rip you off, but never impossible.
Biggest problem, Market Makers, headtraders and brokers are exempt because of corruption in the SEC.
posted
As with Glassman, I never short nor use a margin account. I play a fair honest game and usually do well. When you play by the rules, play an honest game, you become very skilled at the game.
Precisely Glassman. It is Karma. Life has a way of returning to you, what you do, good or bad.
posted
obviously shorting is bad, but I dont understand why the negativity towards a margin acoount in general.. how is it bad for Karma?
Posts: 1148 | Registered: Jan 2004
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It took me years to repay neg Karma from my repo biz--i was protecting investors in a very wealthy community where anybody who wants work can find it--but i still managed to offend the spirit. Admit i liked the adrenalin more than the money-maybe part of it.
Posts: 36378 | From: USA | Registered: Sep 2003
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quote:Originally posted by realityinc21: [QUOTE]Originally posted by Purl Gurl: [B]Did I write four foot eight?
SOME HOW I JUST DON'T BUY THAT!!! BUT IT'S YOUR STORY AND I WILL LET YOU TELL IT!!I KNOW YOU WERE A HEART BREAKER AND A WILD ONE AT THAT!!! JUST GOTTA HUNCH!!
TO CLARIFY: I WAS TALKING ABOUT THE STATURE OF PURL GURL. LOL 4'8' VERSES 8'4'
I WOULD HARDLY MAKE SUCH A STATEMENT ABOUT MARGIN ACCOUNTS OR BROKERAGE USAGE OF STOCKS WITH MARGIN ACCOUNTS. I TRUTHFULLY KNOW VERY LITTLE ON THE SUBJECT. BUT I AM LEARNING THRU PURL AND G-MAN. PURL AND G-MAN HAVE THE FACTS ON THAT ONE. TRUST THEM. TRUST ME ON A GOOD DAY TRADE... LOL
posted
A margin account "enables" shorters. Another way of saying this is, "You are helping those shorters by making your shares available."
We clearly cannot stop shorting but working together, we can make shorting more difficult.
Only cure for both shorting and pumping, is to hold the SEC to task, to bring an end to all this corruption in the SEC. This will not happen in our lifetime.
Might be better, though, for our children when they reach the "investment" age.
On a personal level, and this has nothing to do with margin accounts, I always pay cash for whatever, including big purchases like real estate. When our family credit card bill exceeds three-hundred dollars, this sends me into a panic!
quote:Originally posted by The Hippo: obviously shorting is bad, but I dont understand why the negativity towards a margin acoount in general.. how is it bad for Karma?
If you have margin YOUR SHARES can be borrowed to short against you--If you follow Karma and you are not a borrower then maybe you are accumulating good karma by being used-- i don't know--I just try to walk the middle of the road. If you short-sell you are not sending positive Karma to the world--world/ nature always a struggle to find balance. Enough about Karma--its a series of choices and bargains with yourself--people who live in glass houses......
posted
shorting has been around for ages, nothing wrong with it. you few people just like to whine about things. other people shorting hasn't cost me a thing, in fact when they short a hot stock of mine and good news comes out they scramble to cover driving up the price of my stock, i sell and make more money. other people shorting doesn't cost you a thing. with these penny stocks maybe its a different story since nobody know how many shares there are out there. THERE IS NO DELAY WHEN YOUR SHARES ARE BORRWED
[This message has been edited by metal1 (edited January 30, 2004).]
posted
Not whining-- what you do is your business-- I don't throw stones--as i said--but not everybody knows about this and i am making them aware of the situation--it's about choices and being informed.
Posts: 36378 | From: USA | Registered: Sep 2003
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posted
there are very few greater pleasures for me on the market than a good strong short squeeze metal-- but if you have been paying attention you would know that naked short selling has been rampant and it even shows in the SEC filings of nite-- this is bad and unehtical-- it amounts to an unsecured loan and right now they are ending it legally-- if this scenario doesn't work out just right--you may find that YOU don't own shares that you think you do--if you don't beleive me and you care-- do some DD--
[This message has been edited by glassman (edited January 30, 2004).]
"...shorting has been around for ages, nothing wrong with it...."
Nothing wrong except in almost all cases, it is illegal shorting. In almost all cases, either illegal or unethical shorting is done by Market Makers, headtraders and brokers, with blessings of a SEC blind eye and a deaf ear.
You really need to research this topic. A good starting point is a well known topic generally known as "Bermuda Shorts."
"...you few people just like to whine about things...."
Which well explains the new NASD rule and the coming SEC "SHO" rule regarding this problem of shorting. Last trade year, more than several hundred companies officially filed complaints with the SEC for shorting of their stock, and many companies initiated civil litigation against those shorting a stock with unlawful intent.
Strikes me there are more than a few people "whining" about this problem.
If anyone is whining, it is you whining about our discussion of shorting, a rather pleasant and intelligent discussion, with a minor exception.
"...other people shorting doesn't cost you a thing."
When it is your stock, this costs you an amount equal to the loss in value of your stock shares. This is a simple notion.
Another topic for you to research is the two counter-balance forces providing some price control on markets. These opposing forces are shorting and pumping. You will also do well to research how the new NASD rule, if enforced, along with the coming SHO rule, will create market chaos by diminishing shorting and adding more power to pumping.
My suggestion is you quite your whining, hit the books, and learn a bit more about this topic. It is clear your knowledge on this topic, is sorely lacking.
posted
Don't hold back PG- let us know how you really feel--LOL The coming bull party could be fun-- we need to keep the pressure up on the powers that be. Speaking of bull parties have bothered to look at the IBZT news-- there might be some unhappy people if that E gets hung on the end. I will load up if it plays down.
Posts: 36378 | From: USA | Registered: Sep 2003
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Yeah, my hopes are people around here will make money on Ibiz. This is fun for all, even for those not vested.
I enjoy discussion of stocks and the markets as much as I enjoy many other topics. Might be I play the Devil's advocate, both in a positive light and in a negative light, to the annoyance of others.
Nonetheless, readers need to read both positive points and negative points. This is prudent and wise for investors.
You keeping up with that USTT stock? One says 3.00 by March, "another" says 1.00 by March. USTT keeps on falling in price! Keeps falling like this, USTT will have a record breaking day hitting that one dollar per share mark!
Been working on and cleaning up our vacant rental all afternoon. Yuck... This will be a major refurbishing job, repairs, paint inside and out, new carpet and all that. Double Yuck...
posted
Oh i know you did-LOL--rental props--many neater cleaner jobs-- but i guess they make money for some of you-- i have no luck in RE. Too many hours-- when you add it all up i don't think it pays so well all the time--but,just like trading--it's how smart you work --not how hard
Posts: 36378 | From: USA | Registered: Sep 2003
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posted
I was an exchange Specialist for years and know what i'm talking about. yes, there are many complaints about shorting but specifically about the OTCBB. i guess i should clarify. on any listed or major exhange stock shorting is an important tool. but with the BB and PK stocks i think there is obvious manipulation. in that case you are correct. most of these companies are bascially a "scam"(for lack of a better word)anyways since many of them don't even make SEC filings and one never know how many shares are outstanding anyways. i'm not bashing anyone but i guess trading all these minuscule companies comes with additional risks. so these complaints seem like a garbage man wanting to pick up cleaner garbage. lol, enough from me on the subject.......good luck in all your investments.
The amended NASD affirmative determination rule, which was recently approved by the Securities and Exchange Commission, will particularly affect short sales conducted through foreign brokers, most specifically Canadian brokers which have often been used by investors to sell short the stock of small U.S. companies trading on the Over-the-counter Bulletin Board or OTCBB.
posted
Agreed metal1, I think there is a place for short selling on the big boards as long as it is done in a legitimate fashion. It better defines the pps and values, however, there is no place for liars and cheats who try to downgrade or ruin good companys with persistant, yet unfounded attacks. OTC and PINKS are too fragile for the kind of bombardment the bashers can launch agaist them. Personally I've never sold short. For some reason it just goes against my grain to bet on a losing horse.
posted
Madmacd, that article by Richard Geist is an excellent article. I took the time to read his article several times. Thank you for providing a link; very beneficial.
Geist writes:
"...An Adhominem argument...attacking a person's character rather than addressing the rational flaws...."
Ad Hominem is the basis of Raging Bull boards. You read this type of logic everywhere. My habit is to dismiss those engaging in this type of activity as less than intelligent and not to be trusted.
What Richard Geist has accomplished is to adapt logical fallicies of debate to the topic of stock markets. His writing is very good and of good common sense.
All should take a little time to read this article suggested by Madmacd.
posted
Metal1, you are backpedaling on your previous statements.
I have a sharp tongue and take pride in maintaining a sharp mind, although my mental sharpness fades with age.
Shorting, as indicating in my previous article, is needed to counterbalance those who pump. Shorting and pumping are healthy, in this context of providing counterbalance and leveling stock prices to more true values.
Nonetheless, this new NASD rule is without merit containing a deliberate hole for those I roll into one ball, Market Makers. This ball includes Market Makers, headtraders, specialists, brokers, company owners and others. Easier to label all as Market Makers.
This hole is the NASD has placed criminals in charge of enforcing laws (rules) and no provision nor comment has been provided for violations of those rules.
Placing Market Markets in charge of this new rule is to place wolves in charge of tending a sheep flock.
Market Makers inherently have a huge host of excuses for wrongdoing.
"I didn't know." "Didn't look that way to me." "A record keeping error is at fault." "Nobody watches nor cares, so why not?"
This NASD rule is toothless and, in my dubious opinion, is nothing more than a political ploy to call off the dogs. This type of political ploy is indicative of favoritism, more often called corruption.
SEC and their "SHO" rule. Absolutely and completely toothless. This new SHO rule to come is both a sham and a scam. This is another rule written to diminish very legitimate complaints by private investors.
I view both NASD and the SEC as good examples of corruption and political favoritism.
Why is this my view? Both the NASD and the SEC are populated by those who are the very crooks. When NASD and the SEC start pulling in members from our pool of private investors, only then will either have some degree of credibility. Currently NASD and the SEC are run by and for, Wall Street.
On unethical shorting of brand name stocks such as Microsoft, IBM, Disney and others, the only reason Market Makers do not engage in unethical or illegal shorting of those stocks is it costs too much!
There is no magic about less expensive stocks being shorted, and expensive stocks not being shorted. It is all a matter of money. This has nothing to do with ethics nor a lack of ability to short any stock. It is just money.
All these scandals of late? Nothing new at all. The SEC and the Feds are prosecuting a few for public relations only, rather than for public protection. These "captures" of crooks, only represent a tiny percentage of the crime being committed out there.
NASD, SEC, Feds, others, they are actively engaging in a ploy to fool the public.
During my dialogs with the SEC, they produced only two prosecutions for shorting, early last year, in an attempt to convince me they are actually taking action. Two prosecutions over a period of one year. Personally, I would ashamed to admit to that.
Clearly I have no faith in NASD, SEC and the Feds, for well substantiated reasons.
This lot I call Market Makers, almost all are outright crooks and are in charge of those bodies designed to regulate them.
Wolves in sheep clothes, tending a flock of sheep.
posted
I don't have level 11 yet--I have full real time streaming quote-- I can sit here in real time and watch MM's "short" manipulate a stock by watching the volumes on the bid/ask ticker. The asks are large and the bids are tiny-- it looks on the chart like huge voluems are red-- the selling is big--but the ticker tells a different story-- happens all the time in less expensive stocks--did you look up how much income nite had from stocks sold, not yet purchased? Shorting is fine for some things and times but I'm a bull-- I take my losses without whining and i wait till the crying game is over and jump on that bull.
Posts: 36378 | From: USA | Registered: Sep 2003
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posted
Incidently, the average amount of time taken by the SEC to investigate and respond to public complaints, is two years. Almost all public complaints appear to be ignored.
How many legitimate responses have you received from the SEC addressing your stated concerns? Out of dozens of mails I have sent to dozens of SEC offices, in total, I received one response and that response was a whitewash job.
posted
NITE! One of the worst of offenders! Any fool like you and I, can easily see what they are doing. There are many others just like NITE, many others.
posted
Sometimes letters to politicians help-- but sometimes they just create another 2 names to add to the politicans potential contributors list-- yours and whoever you're complaining about--LOL