You mean "Traders" not investors" The problem is that the stock...

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Bakerman

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10/03/20

09:52

Post #: 43399066
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Originally posted by BabaRoga_space: ↑

You really need to have a look at what happened when governments banned shorting during GFC to see what happens:

Stocks didn't stop falling and stocks didn't recover.
Stocks plummeted when shorting was banned. Investors couldn't hedge their long positions with shorts, to offset losses. So instead of calming the market the ban caused investors to dump their holdings on the market. Market which had no buyers as investors weren't gonna try and catch the falling knife while they can't hedge their positions. Margin calls were triggered, companies were starved of funding and CRs.
Australia lost 30% of companies to lowball takovers as shorting ban was kept in place.

The Yanks on other hand realised very quickly what's happening and removed ban on short selling, which triggered capital inflows to companies. Companies that went on to take over Aussie companies starved of capital and ability to raise money.

Hence why US market went on a massive bull run with shorting allowed and ASX didn't recover with shorting banned. It recovered when shorts were reinstated and subsequently went on a bull run.

It's not as simple as: banning shorting curbs the market drops. It actually had opposite effect during GFC and other times it was tried.
I don't know what government can do. The only thing that worked in the past is Chinese approach: government pumps billions into stockmarket, buying up equities on market. Effectively putting the floor on losses

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You mean "Traders" not investors"
The problem is that the stock trading platform is not a level playing field with the Traders having a clear advantage over investors.
"Australia lost 30% of companies to lowball takovers as shorting ban was kept in place."
So whats to stop the shorting winding the price down to a TO point anyway?

GXY Price at posting: 75.5¢ Sentiment: Hold Disclosure: Held
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You mean "Traders" not investors" The problem is that the stock...

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