cudeco in fin review article, page-20

jadel,

I don't see how 4 shareholders who choose to sell together at the same time is illegal. They are entitled to do that in a free market. There is no rule saying large shareholders have to line up in a queue to sell one by one.

If you believe the hedge funds have pushed the shares down to an unreasonably low level, no one is forcing you to sell the shares. There is no damage done to the actual business itself.

If you have to sell because of a margin call or something similar, then you're a trader not an investor - and part of the trading game is that, as long as the rules allow it, you should expect other market participants to use whatever strategies or tactics they have to maximize their own financial gains without regard for your own losses. That's what you sign up for when you agree to trade, as opposed to invest in, shares.

As to the Gai Waterhouse example, I don't bet on racehorses myself but you appear to describe people acting on inside information. I don' see that with CDU - there's nothing to indicate the 4 sellers know something we don't know, that they know something the company has chosen to keep secret. I think CDU has put plenty of information out there to make an informed decision and I don't see any reason to think they're hiding something big from investors.

As for splashing gasoline and setting fire to a house, I don't see that as comparable either. First, a hedge fund shorting doesn't actually damage the actual business. Second, what they do is legal and if you agree to trade in shares of CDU, then you're essentially agreeing to the possibility that you'll lose your 'house', ie. your money, to your counterparty. That's a key difference - whereas someone getting their house set on fire has that event forced upon them, someone losing money in a trade chose to make that trade in the first place, knowing it was dangerous.

It really is hard to see the hedge funds shorting as a fraud when the only damage they do is to traders who bet that the shares would go up. As a trader they should know their money is fair game to tactics like that. The other side of the coin is that the hedge fund's money is fair game too - they put their dollars at risk of a short squeeze if they short the wrong stock. All the warnings people make about day trading isn't myth, it's real - day trading is dangerous, and there is a high risk you will lose money, esp. for inexperienced traders.