shorting issue..., page-10

Hi Swap, you're right creative destruction is an economic notion, which was based on innovation and change which affects industry etc and can cause a change to the market place. It refers to a shift of profits from one enterprise to another. When we look at the share market there are a couple of levels to look at. You could look at it in terms of the underlying company. Or you can look at it in terms of the share price. It is possible for the share price at times to not adequately reflect the underlying business. Take ABC for instance, they have not lost profits due to innovation of competitors or new industries. Sure they may have had a worse then expected result. On another level hedge funds have used this information to target shareholders. You could apply the theory of creative destruction to the shareholder level as opposed to underlying business. I guess I have simply suggested that if you can use the theory at this level then why not use it to other levels of society. Where do you stop. I could argue that the company's board should be free to do many other things that would be to the detriment of the hedge funds which are shorting at considerably higher quantities (especially when they churn) then the average punter. Wouldn't it have been interesting to watch if ABC had of anticipated the hedge Funds that day after their announcement, and had a friendly body come in with a takeover announcement at a price substantially higher then what the shorters forced the price to. There would have been plenty of people screaming that the board had manipulated the market. I don't know, just throwing stuff out there. At the end fo the day the market will sort itself out and there will eb change to the way it operates. Perhaps thats creative destruction as well