Thanks for both posts. I enjoyed reading them. I was half-way through replying to the first and the bloody flaky HC web site crashed and my draft was gone after reloading. Bloody Awesome! It's getting late here and I'm not sure I have it in me to attempt to replicate it. I'll just try to get out some key responses, but I know it's going be incomplete.
I didn't mean to come across as an absolutist (re-"zero incidents"). That's not the way I think. I don't believe the market is completely free of attempts to manipulate. Quite the opposite, actually. I think it's everywhere in this game -- the desire to manipulate, rather than the ability to be particularly successful at it all of the time. My earlier comments around that tried to deal with a specific situation. Equally, I'm not a 'throw the baby out with the bathwater' believer either.
When I talked about longs having the capacity, via borrowing cash to fund purchases, but not necessarily the desire (or will) to couteract the shorts to borrow shares to fund short-sales during a bear market I was attempting to make the point that what was good for the goose should be good for the gander. It wasn't designed to mean that longs will (or should) exercise the same degree of conviction during a bear market as the shorts or selling longs might. Basically designed to inject some balance into the so-often one-sided arguments presented during bear markets for the 'need' to ban shorting on the basis they are not entitled to borrow shares to sell.
I also liked and agreed with your commentary around market power. While I support the idea of shorting, I'm often left stone cold by the surrounding behavioural baggage that accompanies it, which you listed nicely. Could there be improvement in the framework around that? It would be very nice (for both sides of the street), but I won't hold my breath. I also acknowledge and agree that less overt manipulation occurs around the edges in the form of running stops, FUD, etc, etc. What can I say, bad news sells much easier than good news. It's how we're wired (sadly). Not sure much can be done about it to the sell side, just like I'm not sure how much can be done about a CEO with a gift for overpromotion who knows precisely which buttons to push to pump their dog lifestyle stock leading into the next CR, while remaining 1/2 inch behind the line.
The conversation seems to have morphed and broadened dramatically beyond the starting point of short-selling. I don't mind at all. I found it quite stimulating.
I've probably missed some stuff, but I'm fading and I'd better go before the flaky HC site screws with me again.
Cheers.
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