Treggs"If share owners have the choice on whether to lend out...

Treggs

"If share owners have the choice on whether to lend out their shares for short selling I think the amount available for shorting would become quite limited and probably balance out the practice."

I agree entirely! Who in their right mind would lend out their stock to someone intent on driving down the value of it?


Wink

Longs and Shorts are not at all symmetrical, so arguments based on "the flip-side" are fallacious.


In general - Shorting is immoral because the person shorting seeks to profit from the harm done to others, i.e. the reduction in value/wealth owned by others. Someone who seeks to profit from longs does no such harm to anyone.

The technical feasibility of shorting has nothing to do with the morality, nor do any of the so-called arguments such as liquidity or price discovery.

The reality is that only the most liquid stocks are shorted - the liquidity has to be there before shorting starts.

The asset bubbles you refer to Wink do indeed have negative consequences. But these are not symmetrical to the problems of shorting. If you want to start a discussion about how to avoid the problems of bubbles, that could get interesting.

Most important to note though is that shorting does NOT prevent bubbles - it just pricks the bubble at the top, resulting in very sudden collapses, and inevitable overshooting at the bottom.

So allowing shorting is NOT a fix for asset bubbles, it just increases volatility. That is a traders wet dream, which is why traders argue in favour of shorting, whereas investors and company builders (Gerry Harvey for example) argue against it.

Traders thrive on volatility. Investors and company builders prefer stability, or consistency.