The fundamental idea of a stock exchange is a place where honest...

The fundamental idea of a stock exchange is a place where honest industrious men of integrity can exchange the ownership papers of companies they own parts of, that generate genuine incomes from providing products or services to others at fair prices. Their shareholding increases as they invest more in their business, and those investors increase the true value to society of their investment in it. It is a place where realistic values of companies are found through open and clear disclosure of what they do to produce their profits. If you want to own a part of such a company you agree to pay a fair and agreed price that both parties accept as being real and reasonable. It is an open bidding auction where anyone with the money can decide whether or not they are willing to pay X for Y. It transparently depends on open declarations of business progress that can be and generally are independently audited so as to establish their veracity. The share price should thus dynamically tend to fairly represent the true and actual value of the company at any point in time. This is a great idea, and one that serves every participants interests equitably and fairly, precisely because its trades and the rules of trading are equitable and fair.

Then came shorting, the worm in the apple, a practice where non holders could rent a share for long enough to cause it's value to be artificially pulled down in an attempt to distort the share's apparent value down to an unrealistic level, so that other holders were led to believe that the then current SP was being genuinely devalued for good and real financial reasons. As those holders were persuaded that their shares represented far lower value than they had understood to be the case, having listened to the company's officers and managers, they were persuaded to sell at such low prices - and thus take a loss in the process. At that point the shorters would try to buy up those same shares and then, having bought all that they could, would cease to force the price down, whereupon it would naturally rise to its 'real' value. The shorters would then sell those stocks at a profit, and if possible repeat the process over and over again. Rinse and repeat. This practice is made possible largely by those who 'rent out' their shares for the purpose, as well as by those who effectively do their business by robbing the weak by such deceptive devices. If this was a group of thugs hanging around outside of a school to rob the littlest and weakest by muscling them into dropping their lunch boxes, so they could walk off with a feast, leaving them in the dirt with no lunch and no means of resisting the gangs. We would call this out for the despicable practice it is. But the worst of it is when the oldest biggest kids in the school both facilitate and control those gangs and protect them while taking a cut of the profits as the cost of the rents they demand for the use of their shares.

How can this possibly be justified by any economic sophistry? As yourself how and why this could be regarded as a process that helps 'the market'. It is not 'the market' that it helps, but only those very few players within it who are able to manipulate and exercise an unfair advantage over it by virtue of their size or sophistication, to act as a predatory stranglehold upon it, so as to make it innately unfair to the smallest and weakest of its participants. That is where its rules should reflect what they were designed to achieve. The point is that the thugs and their owners write the rules to suit themselves, then cry foul when challenged.