I've actually had a reply from the ASX on the phone as to why...

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willi5

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09/10/23

15:38

Post #: 70248803
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Originally posted by MTV: ↑

A word on shorting:

I’ve read on HC forums that when pressed on the subject, the ASX cites “price discovery” as a reason justifying short selling.

Only a predatory ultra-capitalist, or useful idiot, would believe that. And the reason is simple. Short selling artificially increases the supply of shares on the market. Economics 101 teaches that supply vs demand sets the price. Price moves up with increasing demand and down with increasing supply. It follows, that if supply is artificially increased, then price is artificially depressed. Shorting has further indirect effects on supply vs demand as the falling SP causes holders to sell, and serves to suppress demand. When shorters start to close out their positions they soon drive the market dynamics in the opposite direction, increasing volatility. How anyone can call any of this “price discovery” while keeping a straight face, is beyond me.

Ultimately, it is a zero sum game. So we could take the view that long-term holders need not be concerned. And this is true, at least right up to the point when they need to sell for reasons beyond their control, or until the company needs to raise capital. And here-in lies the real rational for short selling. The ultra-capitalists can use it as a market manipulation tool to gain low entry price points into rising stocks they were not earlier willing to invest in. So just because it is a zero sum game doesn’t mean there won’t be winners. And where there are winners in a zero sum game, it follows that there must also be losers.

But we shouldn’t really blame the shorters. They are just sharks doing what sharks do. It is not for nothing that short selling has been either heavily regulated, or outright banned, in virtually all stock markets until relatively recently. The real blame must be laid at the feet of the useful idiot ideologues at the ASX, in ASIC and Treasury, and in government, who have been the facilitators allowing short selling. Perhaps the movie "The Big Short" is partly to blame for the acceptance of short selling these days. There the shorters were the good guys, depicted as serving a righteous cause. The reality on the ASX couldn’t be more different.

Full disclosure: I admit to having enjoyed The Big Short.

All IMO.

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I've actually had a reply from the ASX on the phone as to why they allow shorting. Liquidity was the reason I was given. so the reason we allow SP to be dragged like this, is so people can sell shares?

and I get it... you gotta make money on the way down and the way up apparently... for some reason that has to be part of the game. but it's gone too far the other way now. there needs be be regulations that only companies paying dividends can be short-sold.

but, as I stated previously. there was something the company could have done. Go into voluntary suspension with suspected disclosure issues connected to a short attack. As I mentioned previously, you can't expect to be dealing with these big companies to lock in a contract and not have leaks, just too many people involved who could make a quick buck from inside info.

WBT Price at posting: $2.82 Sentiment: Buy Disclosure: Held
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