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Well, my story is an analogy, designed to explain. I think we...

  1. 2,493 Posts.
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    Well, my story is an analogy, designed to explain. I think we can agree that shares are not Kombis without invalidating the points made.
    A major point, which Permabear highlights above, is the assymetric nature of the trade. Institutional shorts rent shares, typically from Super Funds so they have a huge amount of leverage compared to the actual owners on the long side.
    Second point is the ability of the modern, well organised hedge fund to actually generate the required fear, often on flimsy evidence. Mkr posting on HC doesn't make any difference to the equation but sometimes, as others have highlighted, good companies can be decimated by the dodgy dealings of large scale shorters acting in unison to spread fake news.
    The answer is simple. If the owners of the shares form a negative opinion of the future worth of their paper, then they should sell. The market price of the paper will then fall, if the negative opinions outweigh the positive opinions. Job done. Owners should also be allowed to short, to cater for the situation where they may be required to hold a stock but wish to protect against a perceived downside risk. Renting should not be allowed.
 
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