Comments on: Reinstate the uptick rule

By: Eric Newman - TFS Capital, LLC

Eric Newman - TFS Capital, LLC — Mon, 19 Jan 2009 20:44:44 +0000

Proponents of reinstating the uptick rule are unable to come up with a single piece of evidence that short sellers are impacting the market.

So let’s look at some actual data. Between July 15th and November 14th, short shares outstanding fell by more than 5 BILLION shares on the NYSE, and by more than 3.5 billion on the Nasdaq.

But during that time, the S&P 500 fell 27.5%, and volatility (as measured by the VIX) more than doubled, increasing by 132%. How exactly did short sellers BUYING back 8.5 billion shares of stock cause the market to collapse and volatility to rise? The answer is that they didn’t.

The uptick rule only affects stocks. But we have seen dramatic increases in volatility of oil prices, bonds, and just about every other asset class. How can anyone believe that the higher volatility of stocks was caused by the repeal of the uptick rule, when volatility is higher everywhere?

Between September 19th and September 26th, Washington Mutual fell by 96%. Is it those manipulative short sellers again? Well, no– short selling was banned in hundreds of financial companies during this time, including Washington Mutual. Let’s be clear: Short sellers are not driving price. In fact, the data shows that short sellers serve to regulate price– they are part of the few who are buying when stocks go down, and selling when stocks are going up.

Stocks go down because they are overvalued. There was too much leverage, and too many companies didn’t bother preparing for anything besides the best of times. Let’s stop blaming the short sellers already.

By: Paul Ochs

Paul Ochs — Sun, 28 Sep 2008 04:24:13 +0000

The Up Tick Rule is important,

By not having the Uptick rule, shorts can sell at the bid, keep hitting it down, punching through stop losses, with market makers not realling supporting the stock anymore, the shorts will force margin calls, etc.

If you made shorts sell at the Ask, or into the buyers order, you can’t force margin calls etc.

Go to http://www.bring-back-up-tick-rule.com

By: Ralph

Ralph — Tue, 29 Jul 2008 20:38:36 +0000

Your an idiot. The short sellers have nothing to do with this mess. It wasnt short sellers Buying CDO’s Like they were goverment bonds when in fact they were the paper of second and third lien mortgages. Bear stearns and Lehman were the worse. The uptick rule and short sellers are not to blame, so get your story strait. People are just made that the shorts are right and that the people that ran these banks were the ones making the mistake. Stop Grasping for straws. ITs a Joke!!!!!!

By: gs

gs — Tue, 15 Jul 2008 23:30:58 +0000

My opinion, which iirc I've stated here before, is that buyers and sellers should be treated evenhandedly. I don't see why allowing naked shorting is evenhanded; my concerns with the SEC's move today are primarily with the timing and the limited scope. However, I disfavor the uptick rule; if it is reimposed, it should be balanced with a downtick rule on margin purchases. IMO the first paragraph of the Journal's "Operation Stocks Go Up Always" is gallows-humorous; see also the link to portfolio.com:

The most charitable view of this is that the move is political, designed to make it seem like the SEC is Doing Something in the face of all the chaos. But it doesn't look like that: it looks like the SEC is happy signing on to the belief that stocks wouldn't be falling if it weren't for short-sellers. In other words, the Powers That Be don't trust the market, and the SEC has gone from facilitating price discovery to making it harder.

"When people are hurting, the government has got to move." Hey, fatcats are people too.