Originally Posted by 22rowdy
I'm pretty sure shorting could be outlawed entirely and capitalism would be just fine. There is no real evidence that shorting drives stock prices down, but it certainly doesn't drive them up, either.
I can appreciate your efforts in putting your point across, however there are many forces at work which require the ability to short to make for efficient markets.
When you put an order into your broker to buy some stock, he puts the order in to a market maker or a trader on the trading desk. If your firm does not have the stock in their inventory, they will sell you the stock and go short on it until such time that they can buy it back to flatten their trade.
The specialists on the NYSE floor literally long and short stocks all day long to make for efficient and liquid markets.
Do not be fooled, banning short selling, or implementing the uptick rule just screws the small investors who have absolutely no effect on the markets.
Shorting most definitely drives stocks down, ever heard of a bear raid? Shorting ALSO most definitly drives stocks up! Have you ever witnessed a short covering rally? Today was partially a short covering rally, tomorrow, after the markets sell off in the early morning, if they bounce back, just watch the short covering rally in the afternoon as shorts scramble to get out of positions.
Shorting creates liquidity and helps the markets rebound.
Anybody that calls shorting unethical or evil has absolutely no clue about the markets and should stick to keeping their money in the low paying CD's and your Grandmothers bonds.