go shorty…
folks downtown have moved into the anger phase of grief and they’re looking for a scapegoat. looks like they’ve found one in shorters–people who short stock. when they find them, i don’t think they’ll want to party 50 cent style–like it’s their birthday. shorting a stock means that unlike regular trading, you are betting that a stock will drop drastically in price and you’ll profit from it*. this practice has proved very profitable for a few (e.g., hedge funders) and it has the financial community mad as hell and refusing to take it anymore. for example:
- john mack, ceo morgan stanley: “it’s very clear to me — we’re in the midst of a market controlled by fear and rumors, and short sellers are driving our stock down.”
- christopher cox, chairman of the securities and exchange commission: instituted a “hard t+3 close-out requirement” mandating that short sellers and their broker-dealers must deliver securities by the close of business on the settlement, three days after the sale–an effort to thwart naked shorting which allows traders to potentially manipulate stocks.
- john mccain, senator from arizona and hopeful president of the united states: called for the removal of cox (above) because he had allowed “speculators and hedge funds turn our markets into a casino.”
in keeping with the hip hop theme, i think everyone should stop acting like little bitches and admit that greed got the best of you–get back to the business of making money in a way that is so legit, you can’t quit.
* example: “you decide to short 10 shares of a stock that costs $50. you enter a short order with your broker, who borrows the stock from another one of his or her clients. once you have the borrowed shares, you sell them. since you didn’t own those shares, you are going to have to pay the owner back in a short amount of time. the stock price falls to $40, so you purchase the shares. this costs you $400 [10 shares x $40 per share] and give them back to the original owner. since you sold their shares for $50 earlier, you made $500 [10 shares you borrowed x $50 per share]. your profit is the difference between the two, in this case, $100 [because $500 - $400 = $100].“
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