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Clearly you do not understand shorting stocks, creating downward pressure and how much money can be thrown in the wrong direction. Currently the market is on a 2 month bull run (That helps with my optimism). People are realizing stocks are dirt cheap and are way undervalued. Bond YTM actually went negative earlier this year forcing more investors into the stock market. Real Estate forecast sales are starting to look up as building permits have doubled here within the past month. Lastly the summer is fast approaching and that means higher gas prices, which mean higher earnings for the big boys. All of that sounds pretty juicy to me. Maybe I shouldnt have said my MAIN reason supporting my stock market optimism is solely based on the uptick rule. However, once the uptick rule is brought back (which there is heavy speculation it will be) shorting stocks will become incredibly more difficult. Which means that when companies report weak profits, or even losses stocks wont plummet the standard 20-30% in one day. Tell me how that is not beneficial? Secondly not to question your intelligence or stock market knowledge but you know about the uptick rule how?
I more than understand how shorting stocks work. I have a financial background. Being able to short sell is an essential piece in an efficient market. Not that the uptick rule prevents this, but it does make shorting more difficult to execute.
And why do critics always bring up short sellers as being the evil demons in bear markets? If the uptick rule is reinstated, I vote we make a downtick rule for buying stocks. One could argue that this would have prevented overinflated stock prices during the last couple years...
And finally; (1) when the rule was first instated in 1938, the market continued to fall by another 30% or so (hmm, that uptick rule sure worked wonders); (2) many sources have found the uptick rule to be statistically insignificant in the downward movement of stocks; and (3) the IRS concluded that they could elimate the uptick rule because it did not allow market manipulation. Barney Frank is attempting to get the rule reinstated and said in March that it would be back in a month. Well, it's May....
I more than understand how shorting stocks work. I have a financial background. Being able to short sell is an essential piece in an efficient market. Not that the uptick rule prevents this, but it does make shorting more difficult to execute.
And why do critics always bring up short sellers as being the evil demons in bear markets? If the uptick rule is reinstated, I vote we make a downtick rule for buying stocks. One could argue that this would have prevented overinflated stock prices during the last couple years...
And finally; (1) when the rule was first instated in 1938, the market continued to fall by another 30% or so (hmm, that uptick rule sure worked wonders); (2) many sources have found the uptick rule to be statistically insignificant in the downward movement of stocks; and (3) the IRS concluded that they could elimate the uptick rule because it did not allow market manipulation. Barney Frank is attempting to get the rule reinstated and said in March that it would be back in a month. Well, it's May....
Fair enough, you seem to understand the market and ill continue this discussion otherwise I wasnt going to continue because non-financial people will not understand.
Im not saying that shorting stocks is the cause for the recession, far from it. Personally I would rather short stocks than long stocks. I dont see the difference in buying a stock off a companies good news, and shorting stock off a companies bad news. However, I feel that large investors (corporations) tend to abuse their abilities. Once word gets out that an investment firm is shorting 1M stocks everyone starts selling, and literally the firm is printing money. With the uptick rule its not as easy anymore. You would probably have to buy 1M stocks, Sell 1M stocks, and then start shorting.... All of this would have to happen incredibly quick because selling the 1M stocks could drop the price. So I guess you would hope the average joe would buy the stock when your selling it, allowing for an uptick, followed by a short position. I also think that using the '38 crash and the uptick rule might be a bit skewed, as people were jumping out of buildings the market got so bad. Lastly, I question the IRS and their market involvement. The SEC doesnt even understand half the stuff investors do. If the SEC or IRS understood the market CMOs/derivatives would not be allowed. Not to mention the power you have when you can short a stock at will and hold a CMO for that company.......wooooooo youre praying that the company crashes and burns..........
Fair enough, you seem to understand the market and ill continue this discussion otherwise I wasnt going to continue because non-financial people will not understand.
Im not saying that shorting stocks is the cause for the recession, far from it. Personally I would rather short stocks than long stocks. I dont see the difference in buying a stock off a companies good news, and shorting stock off a companies bad news. However, I feel that large investors (corporations) tend to abuse their abilities. Once word gets out that an investment firm is shorting 1M stocks everyone starts selling, and literally the firm is printing money. With the uptick rule its not as easy anymore. You would probably have to buy 1M stocks, Sell 1M stocks, and then start shorting.... All of this would have to happen incredibly quick because selling the 1M stocks could drop the price. So I guess you would hope the average joe would buy the stock when your selling it, allowing for an uptick, followed by a short position. I also think that using the '38 crash and the uptick rule might be a bit skewed, as people were jumping out of buildings the market got so bad. Lastly, I question the IRS and their market involvement. The SEC doesnt even understand half the stuff investors do. If the SEC or IRS understood the market CMOs/derivatives would not be allowed. Not to mention the power you have when you can short a stock at will and hold a CMO for that company.......wooooooo youre praying that the company crashes and burns..........
I enjoyed reading your description. And I'm with you, the large corporations at times have far too much control in the markets. They might not always realize the indirect implications of their actions to smaller or layman investors. IMHO, from everything I've read and know, the uptick rule only plays an influence in a serious bear market with investors with low confidence. Stocks are shorted constantly. Investment houses i'm sure hold large short positions right now. Nobody is paying attention at the moment to that since investors have some confidence. To me, the uptick rule plays no influence in the marketplace right now. I'm for an unregulated marketplace so I don't see the point in a tedious rule that affects an outcome every decade or so. And even when it does affect an outcome, the difference is what; 1 or 2%? Is that even statistically significant?
To me, the uptick rule should be about 1000th on the list of things to do in this economy. We need to start with artificial confidence in the markets. Lets just look at last week, we shed 570k jobs instead of 620k jobs and the market jumps 3%? 10/19 banks stress tested need to raise more capital and markets jump? We need to be weary of artificial measures as that is what got us in bad shape in the first place.
I enjoyed reading your description. And I'm with you, the large corporations at times have far too much control in the markets. They might not always realize the indirect implications of their actions to smaller or layman investors. IMHO, from everything I've read and know, the uptick rule only plays an influence in a serious bear market with investors with low confidence. Stocks are shorted constantly. Investment houses i'm sure hold large short positions right now. Nobody is paying attention at the moment to that since investors have some confidence. To me, the uptick rule plays no influence in the marketplace right now. I'm for an unregulated marketplace so I don't see the point in a tedious rule that affects an outcome every decade or so. And even when it does affect an outcome, the difference is what; 1 or 2%? Is that even statistically significant?
To me, the uptick rule should be about 1000th on the list of things to do in this economy. We need to start with artificial confidence in the markets. Lets just look at last week, we shed 570k jobs instead of 620k jobs and the market jumps 3%? 10/19 banks stress tested need to raise more capital and markets jump? We need to be weary of artificial measures as that is what got us in bad shape in the first place.
Id have to agree this has been a more intelligent discussion than the typical NY vs Chicago.
Personally I was ready for the market to plummet into the low 7s high 6s after 10 of the banks need extra capital. Early reports as im sure you know where estimating 9 banks and that seemed to be on the heavy side. Then the report comes out its 1 extra bank than worse case scenario....AND ITS GOES UP?!?! I was dumb founded, absolutely blown away. Personally I cannot tell if the floor has been created (which i hope it was). Mainly because im a college graduate in one week with a finance degree and not able to use it, i digress. However i have a feeling the large investors could be slamming money into the market, reviving the average investors confidence.....Only to have the bottom fall out again. The large investors have their short positions locked in by then, and the average american is de-pants once again. Thats just a theory, which has happened before. Quite frankly the market needed to have a trough because stocks were WAY WAY overvalued. The SEC needs to just stop the CMOs thats what got us into the whole thing. I agree with your free market position. When things are left untouched they their equilibrium. Which is a lesson Obama should have learned because throwing 750 billion into the economy will only create inflation in the long run. Which im sure will be waiting for us after the bull....
I guess if you need to buy something, you always want to buy it at the possible lowest price. So in my case, I ultimately will need to buy my own place, that's why I'm considering buying this year. And I don't know how to judge a place to see if they actually worth it. I mean the real estate market has been boomed to a point that some house is ridiculously expensive. Should I consider a house is about the right price if they are selling with a price that is close to the price in 04/05?
I bought my place in '06, and selling right now. I am priced above what I paid, because I put a little bit of money into it. Just because the market is hitting rock bottom, does not mean that downtown will do the same. Yes, some people are scrambling to sell their places and putting them on the market for EXACTLY what they paid, and others are cut-throating everyone else and really "dumping" their place, which is causing everyone else to re-evaluate their prices.
If you are looking to buy downtown, I would say to buy sooner rather than later. We are getting showings (mostly because the building I live in is in a particular area that people either VERY much want to live, or don't), and I still am confident that my place will sell for what I want. You definitely have a good buyer's market right now, so I would bite the bullet when you find the place of your dreams.
I know I fell in love with my place, and if I didn't start a family so soon, I would've stayed here for a long time. Now I've got to move back east where the family is.
Do home seller in Chicago still think they are in the old days?
Do home seller in Chicago still think they are in the old days that they can sell houses with higher price than last year?
I was negotiating for price on a house, and every time the counter offer from the seller is like 2k to 3k reduction. Considering I'm looking at a 400K to 500K home, isn't the seller ridiculous?
wow, thanks Avengerfire, you are the smartest person in this forum. (replying to something he has written but removed later on)
In such market, it's common to see a negotiation buffer for at least 5%, and the reduction they have made is not even 2% for 2 rounds or counter offer.
wow, thanks Avengerfire, you are the smartest person in this forum.
In such market, it's common to see a negotiation buffer for at least 5%, and the reduction they have made is not even 2% for 2 rounds or counter offer.
Well, that means they arent in a rush to sell it. Not all that complicated...
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seller stepping in
Do home seller in Chicago still think they are in the old days?
