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Just to clarify, i am talking about naked shorting (common in the US), below from The Big Picture (Barry Ritholtz). You can still take a negative position in most papers using derivatives.The temporary ban is on short selling to help the markets heal somewhat (damage from aggressive short selling esp. naked short selling financials). Source: http://feedproxy.google.com/~r/TheBigPicture/~3/PS4hr_YMAeA/short-selling-b.html
"Earlier today, we looked at an October 18, 1930, NYT editorial on on Short Selling. As we now see via Google News, bad ideas are contagious:
• Germany restricts short selling of financials • Netherlands bans short-selling • Taiwan limits short-selling • Australian Regulator Extends Ban to 'Covered' Short Selling • Dutch ban 'naked' short selling for 3 months • Irish Stock Exchange moves to block short-selling • Dubai condemns short-selling of shares
And in related news: • Short-selling set to debut in Egypt as the West moves to curb it • CBOE Head Denounces SEC's Emergency Short-Selling Ban • Swedish not considering shorting ban
V, good point, of course not but its not the same, you can use leverage to buy stocks and then also sell the same stocks, when you unload your position you create a down pressure on the price.
The problem with short selling is that it adds another dimension to buy and sell, the buy side does not have the same instrument. Not to mention naked shorting which is even worse, that way you don't even have to borrow the shares before you short them. Short selling is a kind of self-fulfilling prophecy.