The one question that can no longer be ignored:

[LuckyCharms]

42. Yes, that's the point I was attempting to convey about shorting...

Last edited Wed Apr 6, 2022, 10:32 PM - Edit history (3)

It's legal, people do it, hedge funds do it, but once you start trying to influence the price because you shorted the stock...that's not legal. For the same reasons that CEOs are required to have a quiet period for a certain time period before earnings announcements. For the same reason that in a non-family business, you should not have a father as a CEO, and his daughter as the CFO.

Once you start influencing a stock price to further your own interests, you inhibit organic price discovery, affect the proper valuation of a company, and hurt other investors of that company. You start messing with people's 401k's, messing with people's company pension plans that have stock investments.

You probably will not agree, but I've always been of the mind that shorting should not exist. Don't like the company, think they suck and that the price will go down? Then instead of having the ability to short their stock, why not just go long on their direct competitor's stock (buy their competitor's stock), and buy their competitor's product? That will make the company's stock that you don't like go down organically, with actual and proper price discovery. And then instead of profiting from shorting, you profit by going long since you apply buying pressure to the stock of the company you like and aid their bottom line by purchasing their products.

I don't buy the theory that shorts aid the market by weeding out bad companies. Bad companies weed themselves out naturally because they do bad business. I'll even go a few steps further. There is a notion that shorts provide liquidity to the market, so they are beneficial. I'm sure you have watched plenty of Level two data and time and sales tickers. That's not "liquidity". That's simply increasing trading volume by slapping huge lots of bid and ask prices that make the stock price do whatever it is they want it to do that particular day. How does that help the discovery of a company's market cap?

It's like anything else. Create something, anything, that has the potential to be abused, and humans will take full advantage of that opportunity. I'm not talking about retail investors who have a margin account. I'm talking about how these hedge funds have resources to slam down a stock for years. If only buying long existed, you either go long, or you don't. Simple. Bring shorting in? Get a huge hedge fund slamming the shit out of a stock every Friday so it will hit the weekly options expiration maximum pain strike price. Nothing organic about that.

Off my soap box: your list is excellent.

How about this one too?

Market makers routing 90% of buy orders through dark pools, and 100% of sell orders through lit markets? The SEC publicly admitted that this happens every day with retail investor orders, so it must be legal, but it shouldn't be.