10/29/2008

Japan banned short selling

Nikkei has been up strongly for two consecutive days after short selling is imposed. SGX is still happily allowing short sellers to destroy the value of stocks. Today's hit is OCBC with the news or rumour that it may be affected by Great Eastern's lower profit forcast. And it got whacked all the way. This is how our market works. World class market. Shit market as far as I am concerned. As the way the game is being played, any stock that has value, especially blue chips, will be bashed down. SGX has a provision to take to task people who cornered a stock. Would they wake up from their sleep and take these manipulators to task?

11 comments:

Matilah_Singapura said...

Japan has always had corporate socialism and government-linked capitalism (like Australia) and therefore this is no surprise.

The Jap businessman is always quanxi'd to his mates in the govt. And the conservative govt in Nip-land are out karaoke'ing and geisha'ing with their buddies from the banks, financial sector. All one happy kiss-my-arse-bowing family.

> SGX is still happily allowing short sellers to destroy the value of stocks <

And so they should. Companies who need to be sold deserve it. The market is just — it punishes those who deserve it, and rewards the people who do good things — like short-sellers.

Those companies need to fail, get merged and acquisitioned or liquidated, delisted and money returned to the bond holders.

Sorry for those still long on toilet-paper stock. Dumb-ass shareholders should have exited long ago.

Market justice. True. Moral, and effective.

Anonymous said...

> companies who need to be sold
> deserve it

there are a variety of reasons why people perform short-selling - reasons which could have nothing to do with the company itself

once stock value is driven down it'd take a long time for it to climb back up again - market psychology, maybe

those who are big players are able to manipulate prices easily. this applies especially to small companies - where the volume of shares traded is low

redbean said...

short selling by small players is nothing serious. it is those done by the big boys who could short in the millions within an hour or a session. these are real killers as they distort the market and value of the prices.

who can short 1 mil ocbs shares at $5 in a couple of hour?

Matilah_Singapura said...

Hedge funds short the market all the time. It is part of their strategy.

This keeps companies honest, and weeds out all the "wrong" valuations — i.e. the short seller suggests the company in particular is over-valued.

The market is efficient, and ruthless. If the company is over-valued, eventually the natural order will be restored. In fact, at all times, the natural order is working.

People who criticise speculation frequently neglect that most speculators LOSE money. Many hedgefunds are bleeding from their arseholes. Serves them right.

There is no reason to worry about this. Financial crisis, tsunami and other natural disaster "emergency response", terrorist attacks, corporate fraud, gubment corruption, inflation... and a bunch of other negative stuff is all part of modern life.

If you trace the chain of causality backwards, you will find that THE GUBMENT is the CORE EVIL and FIRST CAUSE of all the shit in the world.

But... we prevail nonetheless. We, as a species, has always got through, and got back on the road of "pursuing our happiness".

And it is possible, and increasingly NECESSARY, to be happy and not live one's life worrying about bullshit one cannot control.

redbean said...

you have given too much credits to hedge funds as if they are the cleansers of society's shit. they are the real thugs and thieves in suit and ties. more deadly than gangsters.

Matilah_Singapura said...

Yes, you are correct. I do give credit to hedge funds because I think they're great.

When he was active, George Soros did more to promote fiscal and monetary discipline on inflationary states' central banks than the combined might of the IMF, World Bank and UN.

Without him states would have dragged on the dishonesty of currency inflation and crippling credit exposures — resulting in worse and prolonged depressions, and widespread civil unrest.

I would add more praise: hedge funds are one of the saviours of humanity. And if they are wrong, they lose — their own assets. When govt gets it wrong, it taxes the citizens and the IMF takes over the national accounting.

Nope, it is clear: by being able to take long-term SHORT POSITIONS, these huge funds impose a "safety valve".

S'pore is one of the first countries to go into (technical) recession. That's good. Because if the govt has a "hands off" policy (which they do), S'pore will be one of the first to recover.

Booms and busts are part of life. Credit crunches and bubbles are a result of free-floating fiat currency systems and fractional reserve banking. But the human species still prevails in spite of these threats to our existence.

Some hedge funds are but. Some are licking their wounds. Others have won big-time. Love them or hate them, hedge funds are not going to go away, and without them we wouldn't be able to progress so quickly as a species.

redbean said...

i always say that when things get out of hand, extremism, no matter how good, they will turn bad. a little derivatives, a little hedge funds are good. they act as checks and balance and also create new ways of financial transaction. but when they act in collusion in total disregard to the destruction and damages they can inflict, then they need to be put on a lease, just like ferocious pets

try letting wild a hundred dobermans or pit bulls.

oh they are hurt. when pit bulls and dobermans start to attack people, they need to be put down. if they behave as pets, they will be adored.

redbean said...

oh, the current minibond crisis is another example of irrational exuberance got crazy. when people forgot that poison is poison and can kill.

the fault is not just the small time relationship managers, but much more, including the culture of greed that we pray to.

Anonymous said...

> S'pore is one of the first
> countries to go into (technical)
> recession. That's good. Because if
> the govt has a "hands off" policy
> (which they do), S'pore will be one
> of the first to recover.

What do you make of the decision to allow the Singaporean dollar to slide? I've been tempted to think that this could be a more politically palatable option.

Matilah_Singapura said...

anon 207

I do not have direct information from MAS, as I'm not "connected" with any S'pore govt agencies (actually I try to avoid them), whatever I say is just a guess.

I think MAS — after increasing the money supply by nearly 30% (thus inflating the currency) over the last few years finally sobered up and allowed "reality" do do its work and correctly price an inflated currency in the market.

Dun worry, there will be another "correction" soon: Japan has just inflated, the Europeans are next, and then the US plans to cut rates to 1% or less. If the MAS doesn't inflate, the SGD will appreciate relative to the other monies, which will be MORE in terms of volume (and therefore eventually have their purchasing powers diminished by being devalued in the market).

Spore's MAS uses forex instruments and techniques to "preserve the purchasing power of the Singapore dollar". The actual workings of the mechanism is of course, a state secret. So all of us "unconnected" simple folk can only do is guess, and try as far as possible to anticipate what can happen, and hopefully "profit" from one's predictions (guesswork!).

redbean said...

we can join them and print more money and spread it around like peanut jam on bread. just the timing of it.