Short selling ban ‘will not work’

The ban on shortly selling will only provide a temporary solution to the current problems to the markets, according to UK-based financial spreadbetting firm ODL Markets.

Duncan Anderson a senior manager at ODL, said: Whilst we have seen an initial bounce on the markets this morning, we are still unconvinced about the long-term future. The removal of short-selling has allowed investors to make more informed decisions on the valuations of banking stocks, with the removal for potential ‘market abuse’ adding a sense of realism to the market. This has clearly been taken positively, however the notion of short-selling is still a fundamental part of a working market.

Sandy Jadeja, Chief Market Strategist at ODL adds: ‘History has taught us that the market itself will continue in the major direction of a trend which in this case is a downtrend. This suggests that any rallies may only be corrective. On a technical level, the monthly charts have now been indicating a much larger degree trend is in place which will require much more than cash injections to save the faltering banking sector.’

Additionally, according to Jadeja, once the full effects have reverberated through the financial sector, there is nothing stopping speculators and investors seeking to short various other sectors, such as the retail, construction and automobile as well commodities and foreign exchange.

As one blogger put it so succinctly:

“People seek refuge in the stupidest ideas before they admit that they were wrong. Holders of bank shares, rather than face the fact that they are bad stock-pickers, want to blame short sellers. So of course, do banks’ bosses. After all, they’d do anything before admitting that they are just lousy at running their businesses.”

The real villains are the stupid greedy banks who thought they could make money from bundling up worthless debt into complex packages – the same people who flooded the market with easy money to people who could never really afford to pay them back … and now face negative equity higher mortgage repayments.

Tags: ODL, ODL Markets, short selling, spreadbetting

This entry was posted on Monday, September 22nd, 2008 at 11:59 pm and is filed under Industry News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.