Welcome everyone!
The first post is about the absurdity of reinstating the Uptick Rule. A properly functioning market requires both bulls and bears. Imposing an uptick rule for short sellers makes as much sense as imposing a downtick rule for buyers who want to take a long position in stocks. That is the name of this blog, DownTick Rule.
Trading programs, believe it or not, can also cause inflated stock prices. Bear "raids" are not unlike bull "raids" a/k/a rampant speculation. Can anyone dispute that investors are better off with Nasdaq at 5000 or million dollar homes justified by 22 year olds with stated income? If regulators truly wanted to stop "raids," they would enforce laws. They would cut down on naked short selling. They would focus on market participants that abuse and violate the law and not impose blanket favoritism for one group of investors.
Studies have shown that even a short sale ban does not stem the decline in equity prices if the companies have weak financials. Traders can easily use derivatives to circumvent any uptick rule or short sale ban. An uptick rule or short sale ban distorts the markets and causes confusion for traders.
A properly functioning market allows the exchange of risks for a price. Regulators should allow markets and exchanges to support both bulls and bears, if they want the public's trust and confidence.
Ultimately, fundamentals -- not market manipulation -- will drive equity prices in the proper direction.
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