Antibody wrote:
"There are many points in your proposition that clearly sit fine with the wider mob especially at the professional hedging and funds end. It's a democracy at the end of the day and I'm generally against intervention. Where I have a major issue is with stock lending; as far as I am aware this is a common activity of pension funds and similar. Now these folks have invested their policy holders hard currency into equity - and from that instant have a duty of care (in law) to enhance the value of the investment by any means,..."
Exactly, which is why one - as a long-term policy holder or a unit holder in any given investment fund - should be supportive of one's fund manager lending the fund's stock out to third parties (provided of course that they are credible prime brokers such as Morgan Stanley or UBS). Stock borrow costs vary between 2% pa (for very liquid, widely held large cap stocks) and 8%pa (for less liquid counters), meaning that for an average investment fund, the returns can be enhanced by 1% or more by stock lending, depending on the degree of stock made available. Given that long-term stock market returns average around 8% pa, an extra 1% would be a significant boost to the long-term value of the fund. If one has faith in the ability of one's chosen fund manager to invest in companies which grow their intrinsic value over time, why should one care in the slightest who was shorting those companies at any single point in time?
"....and improve it by treating with company executives over direction, strategies etc. When these guys lend out that stock to some other anonymous entity for a few pieces of silver it is in the knowledge that the stock will be used for shorting purposes..agree?"
Absolutely, I agree. But like I said, if the value of the stocks, being lent out to be shorted, will increase over time, what does it matter if they are shorted? Those shorts will simply have to be covered at a higher price further down the track.
"I don't care if they short their own stock holdings and put the information in a notice for their holders to see - and beg the question if you believed in the company enough to buy it why are you shorting it? unless there is an ulterior motive? like MSB suffers. I don't expect you will agree with this, but it's my opinion. No offence."
No offence taken; we all perceive things differently. I am just trying to understand why you believe so strongly that shorting is such a negative thing, when there is so much proof that the stock prices of good quality, well-managed businesses with durable business models, go up over time and create significant value of their owners despite the existence of short-selling activity. Clearly, short selling has zero long term impact on good quality companies.
"Regarding new investment in Australia, biotechs etc. I can't think of a retail investor who will be tempted back into the market - the ones I know say it's not the GFC but the well publicized image of a market that that is rotten, corrupt, cloaked in secrecy and way beyond the control of this regulators."
Not sure why you say you don't see retail investors being "tempted" back into the market, I see plenty of retail investors buying shares every day, and this is backed up by official ASX data that shows that retail investor activity is at record levels, having risen every year since the GFC.
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