So much BOT effort for so little, page-7

"....the rubbish that short the stock (shorting is banned in many western countries ) because it causes instability in there markets , here it only puts $ in the vultures pockets and undermines most who request an even playing field on the aussie share market , to me they are criminals..."

Vinn,

As a long-term shareholder in MSB, why do you care a jot what the share price is doing on a daily, weekly (or even monthly, for that matter) basis?

Surely if you like a business and you believe its management is increasing the intrinsic value of the business over time, and if you believe the business has a great future – as you evidently do about MSB – then, at worst the impact of short-selling on the share price should mean nothing to you?

And at best, it gives you additional opportunity to buy shares in that company at lower prices than they otherwise might be, in the absence of shorting activity?

There have been several occasions over my investing life where short-selling of businesses that I like and own, drove their share prices down to levels that allowed me to buy more of those shares at discounts to their fundamental values.

By way of just one example, RMD in late 2011 was subject to shorting activity that drove the share price down from ~$3.50/share to ~$2.40/share.

And again in late 2013/early 2014 aggressive shorting (at one stage just under 25% of RMD’s issued capital was shorted) drove the share price down from $5.70/share to $4.60/share.

Given today’s share price of $8.25, these were quite clearly two great buying opportunities, of which I availed myself.

And thanks almost exclusively to shorters.

Notwithstanding my being a strictly long-only investor, I have zero doubt that I am wealthier today than otherwise would have been the case if short-selling did not exist.

And it just goes to show that short-selling ultimately has little impact on share prices, and that share prices ultimately at some stage come to reflect the intrinsic value of the enterprise.

For today’s shorter is tomorrow’s buyer.

Blaming shorters for ongoing share price underperformance is a bit like blaming the dog for eating the homework.

As market participants, short-sellers tend to induce price discovery mechanisms.

Sure, I can understand why short-selling activity might be at odds with the objectives of short-term traders, who are both buyer and seller of stock within a limited timeframe, but – as a net buyer of equities for the long term – I like and appreciate the role shorters play in keeping markets efficiently priced, and in preventing the prices of businesses that I seek to buy on an ongoing basis from becoming overvalued.

Put another way, as a net buyer of good quality businesses to hold over the long term, I want there to be more sellers in the market place than buyers.

For when the supply of stock exceeds its demand, the share price falls, and I far prefer paying less for the things I desire, than more.

Don’t you?


PS:

"... it causes instability in markets...""

The Australian market looks eminently stable to me.
Where is this market instability of which you speak?


"... here it only puts $ in the vultures pockets..."

You seem to have had totally different experiences to me; for me, the shorting "vultures" have actually helped me put $ in my own pocket. On several occasions.


"...undermines most who request an even playing field on the aussie share market , to me they are criminals..."
Again, totally different perspective to mine. My first-hand experience is that short-selling in fact creates an even playing field for long-term investors by providing selling liquidity that prevents share prices from becoming excessively overvalued.

Instead of shorters being criminals, I actually wish there was a lot more shorting activity because I am constantly on the lookout to by shares in good quality, well-managed businesses. The cheaper, the better. And that's where the short-sellers come in.