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The Masked Tulip

Short Sellers - Any Gone Bankrupt In The Last 48 Hours?

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I know nothing of short-selling and even the BBC doing a dummies intro to it today has left me know the wiser. Can't get my head around someone lending me their shares. Anyhow...

I was wondering whether it is possible that there are one or two boys who set themselves up short positions this week and, whether it is on HBOS or something else, have actually lost a heap of money or even gone bust?

I mean, surely there were boys shorting HBOS just before the Lloyds take-over was announced which resulted in the shares rising? Surely, such boys would have lost a pile?

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Surely the share market has already factored in the known issues surrounding a particular company and that is reflected in the share price at that particular moment in time ?By that token, shorting a share (betting that it will go down further than today) suggests some insider knowledge ?

Is it not a good thing to stop it ? If you want to invest or speculate, buy and sell shares, if you want to gamble, go on party poker.

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Even if they have, I doubt they'd be wanting to admit it on here, to us bunch of vultures. It'd be a bear feeding frenzy!

Crikey, I might become bulimia bear if this torrent of crashtastic news continues.

:ph34r:

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Guest Shedfish
I got some shorts like that for £3 from George at Asda!

they do some great combat shorts... better get in before the FSA clamp down on such outrageous behaviour

it's a bit like only being allowed to bet on one horse in a two horse race, or being banned from black numbers in roulette. truly desperate

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Usually the hedge fund trading accounts will not let them go negative. There will be an automatic stop loss trigger. That way the banks giving them the leverage take on minimal risk.

This is true for smaller traders/funds but it may not be for the big boys.

But I would bet there is someway the banks that give them leverage make sure they cant go negative.

edit:

so a hedge fund cant go bankrupt (ie have negative value)

but a £2B fund might lose 1.8B and only have 0.2B left which is a massive hit and in most peoples books that bankrupt but not technically.

Edited by cells

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Some guy with graphs on Pravda earlier (interviewed by Hugh Pym) stating there was very little short selling in bank stocks. It was sellers desperately trying to dump their shares.

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Guest Steve Cook

if a short position is simply an automated series of batch commands to do the following:

1) Borrow an entity at a given value from another party

2) immediately sell the entity at the same price as (1) on the open market

3) Hold the money from the sale until a given point in the future on the expectation that the given price for the entity will have fallen by that time

4) If/when the price of the entity has fallen on the open market purchase the entity back again off the open market

Immediately give the entity back to the orginal party who sold it to you at the start.

The difference between what you sold it for at (2) and what you buy it for at (4) is your profit.

So, what has been banned, specifically, must be (1)

The rest can still be done in the normal process of buying and selling

Edited by Steve Cook

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I know nothing of short-selling and even the BBC doing a dummies intro to it today has left me know the wiser. Can't get my head around someone lending me their shares. Anyhow...

Yes, I do wonder exactly how the principle of shorting really works, but from what I understand the BBC's explanation was wrong. The whole idea is that you're placing a downbet on shares - selling what you don't have, therefore you don't need to borrow them from someone so you can sell them again(!) Obviously if a large number of short positions are building up, then those that OWN the shares will start selling them causing the price to drop. Though if the number of people going long is greater, the shorters are going to lose their bets.

You can just BORROW someones shares, then hand them back when they're worth less money... how ridiculous. Do the BBC think we're all fools??

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I got some shorts like that for £3 from George at Asda!

Is any one selling short(s) now - I thought they had all brought out their autumn ranges! :lol: Its going to be a long winter until the shorts selling starts again in March.

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...bet on one horse in a two horse race, or being banned from black...

I see you've got a Black Horse avatar now.

We should all get one, remember what a jolly jape we had with the irons?

(Or was that somewhere else?)

Edited by Timm

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Guest Shedfish
Looks like you are going long on the shorts!

Beaut of an avatar --- again!

:lol:

i have to admit to nicking it from a pic on here, so hopefully no-one offended. the FT had a great one too, which the bbc used on News24... Senor Brown riding the horse, on prime time TV... hilarious.

though the horse riding senor brown would be more accurate

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Short selling - you're a trader and take a dislike to a particular share. You dont own it, but want to sell the physical asset, hoping to buy it back cheaper at some point in the future.

First thing you do is check the borrow. i.e. can I borrow these shares so I can deliver them to the person I sold them to. If there is stock available, then I work out the cost of borrow. In order to do this, it is the person who lends me the shares who charges me interest on that borrow, so he makes money on that transaction. Its usually large pension funds who 'buy and hold', and never participate in short-term market punting. They can make good money lending out shares, charging an interest rate, and then getting them back later at a pre-agreed date. The sale is done by the trader, the borrowed shares are then delivered to the counterparty who bought them. However, the short seller has to pay interest on the shares borrowed, and eventually, either has to give the borrowed shares back, or roll them over for another period. If the price has tanked, the trader buys it back at a profit - less his cost of borrow. If it has gone up however, he has done his conkers.

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No, I'm still here!

I just hope thousands of small investors don't get sucked into this bear market rally.

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this whole thing on blaming short selling is just an attempt to lay the blame somewhere else other than where it ought to be. Lets not forget that there is also a difference between naked short selling and standard short selling too. Naked short selling is already illegal and has been for quite some time.

This is just more government bullsh.t spin perpetuated by a media that doesn't know its @rse from its elbow

Edited by contractor

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Under 3% of HBOS shares out on loan this week:

It might only be 3%, but as Ive read here many times, prices are set at the MARGINS.

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This is unf@cking believable.

This appeared of all places on my spreadbetting screen (see pic):

Betfair anyone?

Oh, by the way, "everyone is benefitting" from the Fed SuperSkip, according to the finance correspondent on 24.

200080919___short_ruling.JPG

post-141-1221811383_thumb.jpg

Edited by Sledgehead

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I see IG index's shares have fallen 6% so far today, I take it this is related to the stop on shorts.

I suppose the question is what will the hedge funds do now, either pump and dump or pile back into commodities?

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IG gave me a notice this morning that they would be CANCELLING all short positions in financials!

Well ****** me Jimmy. :huh:

Without short selling as an escape for those with negative outlooks it is just possible, after the current manic jubiliation is over, that stock holders will simply dump stock they can't derive an income from (i.e. from capital growth or lending for shorts). That would make for an interesting October 2nd. It all depends on what exactly turns out to be the sustance of rescue package #1, #2, #3, #4 #5 (at least) from those geniuses over at the SEC. I, of course, have utter faith that the rescue this time will work. :rolleyes:

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  • 336 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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