My Take On The Uptick Rule For Shorting Stocks
Posted by Timothy Sykes on Wed 11th of Mar, 2009 08:20:22 AM
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A congressman said yesterday on CNBC that the uptick rule for Short Selling stocks will be restore din a month, so will that impact my trading dozens of traders are asking me?
No.
I’ve never cared about this rule whether it was there or not and it amazes me that this meaningless, literally meaningless rule, gets so much attention every time the incompetent SEC and govt. and co. talk about getting rid of it, restoring it and back again over and over.
Here’s what this time wasting articles says:
The uptick rule allows short sales only when the last sale price was higher than the previous price.
The rule was first adopted in 1934, five years after the 1929 stock market crash, to prevent short sellers from adding to the downward pressure on a stock that is already falling sharply.
The rule was repealed in June 2007.
“Mary is moving towards the uptick rule, which some people think is very important, some people think it’s not important, nobody thinks it does any harm,” said Frank who is Chairman of the House Financial Services Committee. “I think that will go back (into effect).”
The SEC has so far declined any official comment on Frank’s statements.
The uptick rule is different from the ban on “naked” Short Selling that was imposed temporarily last summer to prevent the downward spiral in financial stocks. The ban, which was lifted last fall, required investors to actually borrow shares of a stock they were shorting. This prevented “naked” selling, in which investors could put unlimited selling pressure on a stock.
First off, when I think a stock is going lower, I look to borrow shares and short it. If I can’t borrow or if I borrows but I don’t get the execution in time before the stock plummets, I say “next time” and look for another stock to short.
Right or wrong, I don’t chase stocks down because that opens me up to the risk of a rebound–I like shorting that initial crack, nothing more.
And, anybody with account sizes under $10 million shouldn’t care because your orders are small and this rule ain’t gonna make a difference one way or the other. People or funds with over $10 million probly shouldn’t even be Short Selling anyways because their massive size makes them easy targets for short squeezes and only a handful of people in the world have proven they can even make $ from Short Selling massive amounts of money.
Naked shorting is overblown–the entire Short Selling world is only $10 billion or so–so the illegal shorting part is probly under $500 million or so…possibly even under $250 million…
But people fear what they don’t understand so short sellers get blamed for everyone’s screw ups. This is classic example of the media hyping something so stupid, so meaningless, it’s almost laughable. Shows you how much CNBC/the financial media/the people making rules that govern the stock market know about the stock market.
Yes, it’s messed up…deal with it. There’s a lot of things messed up on Wall Street.
I encourage everyone, regulators, congresspeople and poor people alike to watch my ShortStocking DVD so you can actually learn from a profitable short seller. The other successful 12-15 guys in the world run millions of dollars and they ain’t about to teach you anytime soon.
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TIM Trades
View All| Date | Stock | Buy | Sell | Net |
|---|---|---|---|---|
| Nov 19 | AENY | $2.80 | $3.02 | $1148 |
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| Nov 18 | IMGG | $1.42 | $1.64 | $2094 |
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| Nov 13 | VRMLQ | $21.50 | $22.97 | $2901 |
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| Nov 10 | EONC | $2.74 | $3.36 | $9784 |
| Nov 6 | QXM | $4.31 | $4.80 | $1936 |
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| Oct 26 | AWSL | $3.24 | $4.10 | $2516 |
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| Oct 20 | CBOU | $8.93 | $9.06 | $243 |
| Oct 16 | VRMLQ | $16.79 | $18.65 | $2773 |
| Oct 13 | YONG | $11.05 | $11.66 | $1202 |
| Oct 13 | NPHC | $0.59 | $0.71 | $583 |
| Oct 12 | IMGG | $0.60 | $0.70 | $682 |
| Oct 9 | ZAGG | $5.50 | $6.10 | $2380 |
| Oct 7 | GVBP | $0.03 | $0.27 | $702 |
| Oct 1 | NPHC | $0.70 | $0.85 | $1482 |
Total: $98,094 (681%)
