Redone

Huguenot Wrote: ------------------------------------------------------- > I can't quite work out what you're saying there > Redone > > It seems to be that everything is bad - but what > would your recommendation be? Are you saying put > the money under the mattress? My point is that over time it comes down to the quality of the individual stocks and that the short sellers can at best only have a temporary impact by themselves. Did they help drive down HBOS - yes. But the main sellers of HBOS shares are the institutions that decided that their business was too concentrated in one business line and they were too dependent for funding on the market. Compare the price movements with HSBC from June of last year. The general move against banks hit them both, but in the final analysis, the market has voted HSBC as the better candidate. Did traders short HSBC - yes, but in the end the fundamentals have stood up better and that is the indication of fair value.

Why isn't anyone asking why Robert Peston broke the news 4 hours before it became acknowledged by the banks. That is market abuse. How much earlier did the people that told Peston know? Who else did they tell? How much trading did they do? The SEC aanounced short selling restrictions that came into effect yesterday. The difference to the FSA is that the SEC rules focussed on the market abuse aspects of short selling and protected buyers of securities. So of course the FSA had to follow, sheep as they are. the institutions that lend the stock are also the biggest investors - the ones that your pension moneys go into, that support your endowments, that support your unit trusts and ETFs. There have been a number of academic stucies that have supported the value of short selling as beneficial to the markets. Today on Radio 4 the head of Standard Life investments said that he is happy the restrictions are temporary. Why do you trust these people to invest for your future, but at the same time question them when they decide that the revenue they get from lending is more beneficial than the potential impact from short selling. Pick a position and stick with it!

The thing is, sometimes people are long term investors. Sometimes they are day traders following up or down trends. Sometimes they are market makers supporting the trading activity of long term investors. Sometimes they are short sellers with a negative view on a stock. No doubt sometimes they are rumour mongering law breakers that are falsely talking the stocks up or down. This is what makes a market - different drivers and attitudes. If you actually believe that the short sellers have been the major force in driving down the price of HBOS since its peak in June last year, then you are crediting them with too much power. The facts on the amount of stock on loan for HBOS dont support your argument. What you should really be doing is asking why HBOS management has been working on a merger for a while without disclosing to anyone publicly that they were in increasing amounts of trouble. The bottom line is that the stock price went down because long term investors gave up and sold and no one else wanted to buy. Stop looking for scapegoats and look at the poor management.