short sales report vil, page-77

SirJohn,

Re Shorting.

I have been on this mortal coil for quite a while now and seen many events occur during that time.

I must confess to being of two minds regarding shorting, I fully understand that people sell stock they dont own( but borrow) and then buy back if it goes lower thereby filling their obligation to supply the shares.

I think that people seem to forget that "shorting" occures in may walks of life outside of the Stock Market.

Car salesmen are continually shorting, a customer goes in to buy a car, he /she has a trade in, the car yard values the car as to what it is worth to him.her as a trade in. he then goes away and sells it to another dealer for whatever price he thinks is appropriate. At this stage he does not own the car, but subject to his deal going through he has already offloaded the trade in.

People attend Mortagee sales of property and are happy to take advantage of decesaed estate sales or mortgage sales.

Peopel do not care about the suffering that is behind the "bargain purchase".

The question I ask myself is, Does the fact that a person sells a stock cause any financial consequences over and above the normal selling by a person who actually owns the shares.

If a person owns shares which are clearly going to drop in value, then a loss on paper will follow and that loss cannot be recovered until the stock price increases back to the original price.

But an astute invester knowing that the stock is going to drop in price has afacility that allows him/her to sell the same amount of stick and then buy back at a lower or the same price as he sells his head stock for, thereby not making any loss.

So as I say I am of two minds about shorting, I dont think that shorting in itself causes the market to drop, for every purchse there is a seller. It is simply niave to think that ever seller only sells at a profit. So I therefore assume that for every sell made some one is losing money.

As I say I am of two minds. the Market has no morality, it is the market place only.

I am sure this will spark some responses.

CB