http://www.youtube.com/watch?v=aC19fEqR5bA&feature=youtube_gdata_player
[video]http://www.youtube.com/watch?v=aC19fEqR5bA&feature=youtube_gdata_player[/video]

Can people with knowledge in finances tell me how this effects Joe bloggs

No idea what all means but the guys desk belongings will probably be waiting for him in a box at his company reception tomorrow along with some security guards and a one way ticket back to the USA!

Don’t know. Has Joe Bloggs got a pension and if so where is it invested? Who does he work for and are they affected?

Does this mean I shouldn’t have transferred euros to my bank this morning?

EDIT no, it means I should transfer the rest of them asap!

Does this guy know what the future holds and is happy to share his knowledge? Is he using a public platform to manipulate the masses? Does he think he knows what he’s talking about and his ego saw an opportunity to put on a show?

If I see someone prepared to stand up and preach I may listen to what they say but I don’t take it as gospel 🙂

what a prick

And That ^ is exactly why naked shorting should be banned. There’s no way he has a position he’s hedging, he’s just massively short the Euro for no other reason to bet against it’s success, not to cover a reciprocal exposure. Then he gets a platform to shill his bid. Tosser.

what a cock. He’s the kind of arsehole that gives finance a bad name.

Edited to add definitions. Sorry for too much jargon.

read this if you want to waste an ruin your day…

http://maxkeiser.com/

If this guy was a serious member of the elite he wouldn’t be wasting his time on BBC news he would be focused on his investments. Look at his blogs/twitter/facebook – the guy is a self publicist. His comments may be correct in terms of direction but amazingly superficial and niaive:

“the market is toast…GS rules the world…”… sounds like a Kn0b with a capital K.

T-bills are yielding bu&&er all and markets have already crashed – great use of hindsight “supertrader”

Stoner – serious question. You can make three choices regarding an investment opportunity – that value is going to (1) go up, (2) go down, (3) stay the same. What is logically different between making a choice between 1 and 2 ie a naked long versus a naked short. I think blaming short selling is a red- herring

Stoner, are you suggesting that he doesn’t typify traders – who essentially don’t care how they make money as long as they make money?

I blame naked short selling.

I have no problems with hedging – its all part of division of risk in the search for liquidity.

BUT to go naked against a position means you can use fear and misinformation to improve your return, without ever having to declare your position. Since you’re naked too, you dont risk the value of the corollary position you would be otherwise holding as well. If you hold a stock, that stock’s price wont rise just because you shill it (it might rise if you’re Berkshire Hathaway and publicise your stake, but that’s a different thing)

I dont agree that naked shorting improves market efficiency or cleans out the deadwood faster. It can destroy a troubled company or currency that has the potential to survive and recover.

Naked longs are not so bad, as anyone holding a long position has the SAME objectives as all those effected by the stock or currency indirectly – i.e. growth and success. I may not hold, say, British Land stock, but as I work in the same sector I gain indirectly from their success, as do moreso their employees. The only people to gain when the company goes down are naked shorters. They have no social imperative to wish the success of the venture.

Cheers stoner, Prior to that I’d always thought naked shorting was something to do with when lycra gets a bit worn out and see though.

He looks high imo

Stoner, are you suggesting that he doesn’t typify traders

no. I agree Forex trader’s like any brokers only make money at the meeting of trading parties.

By the sound of it though he has a stake in a short position. Not just in transactions.

Perhaps if there was a register of borrowed stock – and just as importantly the names of the lenders of that stock were recorded on it, it might reduce the incidence of shorting. By a combination of marking out those that are betting against something (so that any negative comments they might make can be put in context) and perhaps embarrassing those that are helping them do it – the stock lenders, maybe be there would be fewer investors out there looking to make money on the failure of others.

for those that might not understand how one shorts stocks:
Short-selling is the practice of selling borrowed shares in the hope of repurchasing them later at a lower price.

Sorry Stoner – your analysis is too one-dimensional and does not explain why, in principle, it is worse to make an investment based on the idea that the value of an asset is going to go down than vice versa.

Market manipulation and mis-information can work both ways. Remember the internet bubble and tip sheets – people buying stock and then posting false info on them in the hope of making money. Such illegal activity is not restricted to the shorters.

ITS A RED HERRING

There is no logical or moral distinction between making an investment decision that benefits from either the value of the underlying asset going up or down. Superficially the former has a cuddly feel to it, but that is about it.

p.s. you can see the amounts of stock borrowed

if its so socially acceptable to naked short, then bring on the register of shorters (and stock lenders)

It might shock a few people to know that their pension funds make a good chunk of their return renting out their holdings for others to bet against.

I dont see the cuddly bit as being a superficial thing. The objective of bringing liquidity to the world IS a social function as much as providing healthcare. And you wouldnt bet on healthcare failing would you?

PS – name and shame on the register would be more useful than volumes IMO.
and PPS – to emphasisie Im very much talking about naked shorting. I see the distinction as morally key.

Most large pension funds will lend stock – this has been going on for years. You can see volumes of stock borrowing and market players use this info to determine the extent of short selling.

There are plenty of markets that function without comment on the basis of things getting worse. Bond market yields will fall and prices rise in such circumstances. FX/commodity markets are making exactly the same decisions.

So I hope that your pension fund has been making a “negative bet” by investing more in bonds than in equities recently. That is their function.

So bottom line – there is no distinction to be made from investing on the basis of whether you think the value of the underlying asset is going to go up or down. Its cuddly populism (a la Vince Cable) to state otherwise.

A hedge fund may borrow money (it doesn’t have) to leverage the returns it makes (possibly) on your investments. Do you feel uncomfortable with this if it is used to buy equities in the belief that their value will rise?

Is the guy out on the street with a coffee cup yet?

thm – you criticise my posts in a way that implies you think I dont know how these things work. I do. I also cant abide St Vince.

Ive always considered naked shorts to be anathema to investing with a social conscience. None of my private holdings are short or benefit from shorting and to a great extent (because of the way I invest my pension) nor is my pension fund.

Gearing and deciding between bonds and equities is not an act of “negativity”.

Stoner – apologies if I gave that impression, not intended BTW. I respect your personal choice but still fail to see why there is an moral (or other) distinction between investing/betting on different outcomes – positive or negative.

Gearing – is it right to use leverage (ie, money you don’t have) to boost returns?

Bonds – will outperform when econ data is weak/flight to quality or low risk assets – this is not an act of negativity (we agree) but it is making an investment decision based on the fact that things are/might be getting worse. Why is this logically different to shorting a companies shares?

Actually from a moral perspective and to support Rastani (for a change), surely it is wrong to restrict the freedom on individuals to invest/bet in a manner that protects them from negative events. Say you have bad service from a company – shouldn’t you have the right to protect yourself by benefitting (possibly) from that bad service. We buy shares in companies that we like, what’s wrong with the opposite?

Apology accepted. Pax.

As for shorting, it still comes back to the ir-rational behaviour of markets. Put better than I can:

…unlike “longs”, “shorts” can create a self-fulfilling prophecy of value destruction when a company needs capital – or when the shorts instil fear in an already fearful marketplace.

Thus, while short selling may well serve a wonderful purpose in nearly all market conditions, the market today is not “orderly”. Instead, it is getting dangerously close to a panic. In this environment, shorting is creating a market inefficiency (immediate business closures / sales based on incomplete information), whereas in normal times it creates a market efficiency

As I said above, shorting can bring on destruction rather than efficient re-organisation when in a bearish market.

from further in the quote, in respect of the freedom privately to invest in any manner, versus the social impact of those freedoms:

“Free Markets are all very well, but when you see them stampeding about like great big herds of cattle that have been spooked, it’s time to ask whether they should not be reigned in a little through regulation.”

“Now free trading of stocks is an essential element of our society that should be safeguarded. However, borrowing gigantic amounts of stock and then leveraging this borrowed stock to create self-fulfilling market conditions (greatly exacerbated by automatic trading software that will dump stock that crashes through their pre-set minimum) seems to be good for little else than creating instability. In fact, it is most difficult to see how it contributes to equilibrium stock pricing, which is the first function of the stock market. Short-selling may “alert people to the weakness of a stock”, but ordinary trading will do that just as well, and more gradually.”

source: http://rogueeconomistrants.blogspot.com/2008/09/arguments-for-and-against-ban-on-all.html

oddly I have no problems with gearing at all. Its is up to the borrower and lender to assess the safety of their own positions. Although I can see that having a heavily geared stance rock the market is not welcome.

but it is making an investment decision based on the fact that things are/might be getting worse

Its a relative play with a positive expectation – that bonds will perform better than equities – i.e. that ultimately you’re still betting at least in some part on something performing more positively than another.

Of course, it is the case that this relativistic approach would also apply in the decision to bet something does badly, but not as badly as the alternative. But I dont think my morality covers Hobson’s choice.

I think I feel like Charlie in this article

Mr Brooker nails it once again

Enjoy…

BTW just to add to this:

is an[y] moral (or other) distinction between investing/betting on different outcomes[?]

I think there’s quite a bit of distinction between investing and betting.

In it’s most engaged form, to invest is to back an idea, a venture, to have direct financial relationship not only with the asset but also the players.

The increasing use of derivative assets is, of course, reflective of the move towards more betting-based “investment”. The counterparty to the deal is no more attached to the underlying activity than the better. When you buy stock do you not have an enthusiasm for the venture to succeed? How does it feel to hold rented notes and be enthusiastic about a venture to fail?

I say that morally they are two very different positions.

I read that too, binners.
Not even IMO, one of his wittier pieces, let alone insightful 😉

The guy is a nobody.

He doesn’t work for any banks.

His website reads like some sort of awful self help guide
http://www.leadingtrader.com/about/

PS, My favourite “short” story (just above The Big Short)

http://www.guardian.co.uk/business/2008/oct/29/vw-volkswagen-porsche-takeover

bringing out a large dose of schadenfreude among market watchers

Ya. Zis is true. 🙂

Stoner – I agree with the distinction between betting and investment BTW!! But I still think that you cannot have things both ways. Your quotes focus on the impact of short selling when there are disorderly market conditions. But there is an inherent lack of logic in these arguments per se.

No one seems to complain about investments that are made with a bias towards a positive outcome. Only to the reverse (especially company management teams!!). Derivatives do not have to be synonymous with betting type activites. The increasing flawed ETF market was originally designed to give easier access to assets and to reduce investment risk. But again this is taking exposure on a counterparty not an underlying company.

There is an irrational phobia that is attached to the concept of shorting something. We/you may not like this guy Rastani. But I see no argument why we/you should be able to restrict him from making an investment decision that is based on a thesis that the euro will weaken. On what logical/moral basis can this be argued and his or any other person’s freedom to make such an investment be constrained.

We either have the ability to have markets that can move freely in any direction or we don’t. But we cannot simply have a bias to a positive direction simply because it makes people feel happier. Alan Greenspan caused enough problems with the concept of the Greenspan put.

There is an irrational phobia that is attached to the concept of shorting something.

Id agree that a phobia of shorting is irrational, but that’s not the argument here. It’s the rationality of allowing naked shorting.

On what logical/moral basis can this be argued and his or any other person’s freedom to make such an investment be constrained.

Quite simply a “greater good” argument.

Im a free-ish marketeer. But I simply dont believe that every market should remain unfettered when rationality is not universal. That concept holds true even if perfect efficiency remains the objective, as irrationality often reduces efficiency. And as much as it applies to short markets, it also applies to geriatic welfare and fuel taxes.

In a short-free market there isnt a bias in a positive direction, since asset prices may still be allowed to fall. They arent, however, encouraged to fail.

Fun debate for the day. We’ll agree to sit on opposite sides of that particularly dry fence. Ive got to get ready to go to skool 🙂

(but you can have the last word…. 😉 )

This wouldnt matter so much if the Euro political leaders could actually sort out the mess. Check out the blog from Terry Smith the other day:

“Saturday’s Financial Times “splash” article “Global economy pushed to the brink” contained some clear indications of the total lack of realism about the Eurozone and the wider financial crisis. Take a look at these quotes from the article:-

1. ‘Investors were initially unimpressed by the G20’s message of support for the global economy.’ What exactly did the G20 do, send the global economy a Get Well Soon card? These clowns actually think that their vacuous messages and communiqués have some effect.

2. ‘European Union officials are warming to the suggestion that the EFSF could be “leveraged” in a bid to increase its strength.’ If ever proof were needed that these people have learnt nothing from this crisis, here is it. They are thinking of leveraging a so-called Stability Facility. With money borrowed from whom one might ask? Themselves?

Very interesting reading.

that video is being spread around facebook by everyone and their mother.

From the Financial News website:

Global media organisations jumped on the story of a trader who shocked presenters on the BBC News channel yesterday after he claimed “governments do not rule the world, Goldman Sachs rules the world”. But who is Alessio Rastani, the man who “dreams of another recession”?

His three-minute interview [ http://bbc.in/nt5KcE ] quickly became a hit on Youtube, and has been written about in the UK’s Daily Mail [ http://bit.ly/mZrN2m ], Daily Mirror, Daily Telegraph and Independent. The story also ran in the Irish Times, The Wall Street Journal [ http://on.wsj.com/rbRUXO ] and on the CNBC website. It’s even been lampooned by satirical website The Daily Mash [ http://bit.ly/puXIN7 ].

On his website, leadingtrader.com, Rastani describes himself as “an experienced stock market and forex trader and professional speaker”. He adds that he also speaks at seminars and teaches people how to trade the markets.

He has references from several people on his website. One from ‘M. Jassat’ says: “Over the time we have worked together, Alessio has become a key personality not only in my development as a trader but also in my path to financial freedom. I count myself extremely fortunate to have found him.”

Rastani does not appear on a search of the Financial Service Authority’s register of approved persons, and there is no mention of an employer on his website.

Rastani is registered at Companies House as the secretary of a firm called Santoro Projects Limited, with his occupation listed as an ‘investment speaker’.

Records show he incorporated the company in 2007. The firm is exempt from submitting full accounts to Companies House due to its size classification as ‘small’ – meaning it has an annual turnover of less than £6.5m and no more than 50 employees.

Late on Tuesday, the BBC moved to quell speculation that Rastani had been part of an elaborate hoax.

The broadcaster said: “We’ve carried out detailed investigations and can’t find any evidence to suggest that the interview with Alessio Rastani was a hoax. He is an independent market trader and one of a range of voices we’ve had on air to talk about the recession.”

Speculation on Twitter, reported by the Guardian [ http://gu.com/p/327g9/tw ], had suggested that Rastani could be one of a subversive group known as the ‘Yes Men’.

The group are known for impersonating company spokespeople, using media interviews to debase the official position of a firm.

Alessio Rastani could not be contacted in time for publication.

I have some cash in a tracker ISA. Does all this means it’s a good time to move it to something with a guaranteed return?

BBC issued this
http://www.bbc.co.uk/pressoffice/pressreleases/stories/2011/09_september/27/statement.shtml

Typical BBC. Choose some reactionary speculator with an agenda all of his own and give him air time. The man seems jumpy, I suspect he’s frightened by the cost of covering his shorts.

Edit: well lets face it, anyone who was short anything except gold yesterday is feeling uncomfortable today and praying very hard for a fall in anything except gold tomorrow.

The CAC and Dax look like they’re in a bottoming pattern to me at present but I’ll wait for the curves to get over the two hundred day moving average again before throwing too much money at it. Catching the falling brick isn’t easy but once it’s bounced once… .

Another story…
http://www.telegraph.co.uk/finance/economics/8792829/BBC-financial-expert-Alessio-Rastani-Im-an-attention-seeker-not-a-trader.html

Bump for Junkyard.