So sayeth the financial sage, Jim Cramer:
Via DealBreaker
See also:
Short-Sale Restrictions Are an Exercise in Naked Power
Don’t Sell Short Selling Short
The Blame Game Part I: Short-Sellers are Witches
Source link: http://archive.mises.org/8549/shorting-is-unpatriotic-and-an-act-of-terrorism/
Shorting is unpatriotic and an act of terrorism
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{ 11 comments }
God can’t this guy shut up and let her speak? No social skills.
I can not remember if this web site or LRC had it but a short sell is very similar to:
1. Buy the stock on margin.
2. Buy a put for the strike price you paid to protect the stock you own from the expected drop.
3. Sell an in the money call.
Actually this is more expensive and less risky as you are covered against losses in the call as you own the stock.
So I guess the folks using this scheme to bet against a stock is patriotic but not using a short sell. Furthermore I wonder if the terrorists know this?
Bort,
Your advertisements are annoying. Please go away.
Actually, in the options market if you buy a put and sell the same call you are synthetically short the stock. If in addition to that you buy stock, the total package is called a conversion.
Cramer is a huckster.
Yikes… and of course, succesfull short selling naturally decreases the level of volatility. This is known for a very long time. Already in 1910, one S.S. Huebner wrote the following passage in an article in the journal “Annals of American Economy”:
“The writer has been told by several members of the New York Stock Exchange that they have seen days of panic when practically the only buyers, who were taking the vast volume of securities dumped on the exchange, were those who had sold “short,” and who now turned buyers as the only way of closing their transactions. They were curious to know what would have happened in these panic days, when everybody wished to sell and few cared to invest, if the buying power had depended solely upon the real investment demand of the outside public.”
(Fayant, Frank: “Short Sales and Manipulation of Securities”, s. 10)
(Frank Fayant is of course a pseydonym used by the legendary investor Bernard Mannes Baruch)
Actually, in the options market if you buy a put and sell the same call you are synthetically short the stock. If in addition to that you buy stock, the total package is called a conversion.
Cramer is a huckster.
Kramer made a lot of money shorting stocks and for some reason that is now a bad idea but before it was a good idea.
Also, why are shorting financial stocks in trouble unpatriotic while shorting Ford, GM, Airlines, etc not so unpatriotic? I guess the terrorists hate financial folks more than manufacturers and service providers.
I love how the Austrians get marginalized as cranks by mainstream economists and their views are never given airtime but Cramer can posit a financial terrorism conspiracy (@1:20) and still stay on the air.
The current propping up is geared towards the upcoming presidential elections. Goal is to give a semblance of stability until the elections.
My eyes are glued to CNBC but I need to turn away since Charles Schumer is now on and I will be ill.
The promise a free market is in shambles and it frustrates me that not one talking head, not one, even some of the quasi-libertarian analysts on CNBC, have contradicted the premise of “as we’ve seen, free markets are good up to a point.” Could one, just one, respond with, “What free markets? Where?” Is there a free market when large banks are protected from failure? But alas, we do live in the real world, and if the giants do collapse, and if the economy were to grind to a halt, with multi-block lines similar to 1930s bank runs, then do the Austrian’s admit that government intervention is justified?
This is an historic week, and I’ve seen little real-world libertarian arguments that can elevate the philosophy beyond the fringe.
If anybody can point me to layman explanations of a libertarian fix, I’d appreciate.
J.
J, to people demanding easy fixes, there is no relevant libertarian argument that fits the “real world” of politics. What there are are policies with unintended and unseen effects that can placate the masses in the meanwhile. It’s up to the masses to exercise restraint and suffer the consequences of their profligacy (and by masses I mean the political elite that dupes and controls them) or to go the easy way and be utterly burnt.
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