SEC Bans Short Selling Stocks

Well it seems that the SEC has finally woken up to the fact that short selling stocks is not all that good. People have been talking for months about how the speculators are destroying the oil market and those people who engage in short selling stocks are just as guilty of creating volatility in the market. Short Selling Stocks is like a bet where you are not betting on a stock going up but down. You basically borrowing the stock you wish to short sell from your broker and then sell it. Once the price goes down, if it goes down you buy the stock back and pay back the broker with their stock shares. You keep the difference of the short sold stock.

Very few longer term investors get into short selling stocks, but many day traders do attempt to short sell stocks based on market and world news. For example many people are now trying to short sell finanical stocks because of the recent turmoil in that industry and this is the main target of the SEC ban. I personally think short selling stocks should totally go away. While people may not make as much money in the short term, it brings the market back to what it was supposed to be a place where people invested their money for long term gains. Those day trader who short sell stocks needs to just go gamble in Vegas and leave the economy alone.

What is Short Selling Stocks

In finance, short selling or "shorting" is the practice of selling a financial instrument the seller does not own, in the hope of repurchasing them later at a lower price. This is done in an attempt to profit from an expected decline in price of a security, such as a stock or a bond, in contrast to the ordinary investment practice, where an investor "goes long," purchasing a security in the hope the price will rise.

The term "short selling" or "being short" is often also used as a blanket term for strategies that allow an investor to gain from the decline in price of a security. Those strategies include buying options known as puts. A put option consists of the right to sell an asset at a given price; thus the owner of the option benefits when the market price of the asset falls. Similarly, a short position in a futures contract, or to be short on a futures contract, means the holder of the position has an obligation to sell the underlying asset at a later date, to close out the position.

Welcome back!