Today, the Securities and Exchange Commission, according to CNN, “bans short selling of financial stocks on U.S. markets to “strengthen investor confidence.”
Others may understand the ramifications of this better than I do, but I’ve done pretty well lately shorting financial sector stocks that I felt were going to collapse given what we saw unfolding in the subprime crisis. Short positions on stocks are ways to manage risk. I don’t see how ending a long-term practice that is not part of the complex, synthetic derivatives market that is generating problems restores market confidence in the long run.
— Steve Clemons