Spain has crossed the rubicon, and entered into bad decision nirvana as it too decided to ban short selling, which has worked so well for all of those other smart countries which have done so. For instance, when the US did it in 2008, they helped their bank’s shares float to the tune of -48%! Hey, with friends like that, who needs enemies. When will they learn that tempering/tampering with financial markets is not ever as good as it sounds. Keep in mind that short sales put a natural floor under weak securities by creating natural sellers at the end or a trade (whether the trade is successful or not). If the stock is truly overvalued (hear’s to you European banks), then the shares are going to drop anyway as the holders of those shares sell to get out of them. Without shorts, there will be no buying on the way down as speculators and astute investors cover profitable short sales and the only bids you will get are at rock bottom where fundamental guys feel there “deals that can’t be refused” (except for the occasional BTFD fools along the way). That is usually a bid that’s much higher than would have been achieved through the short sale. Of course, nobody explained this to the Spanish
full article at source:
http://boombustblog.com/blog/item/6126-surprise-spain-makes-the-same-ass-backwards-mistake-that-the-us-and-uk-made-banning-shortselling
Related articles
- Why Bills to Speed Up Short Sales Won’t Work (bayarearealestatetrends.com)
- Short Sale or Foreclosure Niche? – Are You Ready to Adapt Again? (realestate.about.com)
