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Mike W.

The pilot study of 1000 stocks was an extremely poor designed study producing misleading conclusions for the following reasons (people with background in statistics know the study was garbage).

1. Very small sample size that produced not statistically significant results (sample error)
2. The same short selling hedge funds that have been lobbying the SEC to eliminate this rule knew ahead of the time which stocks not to short for the period of this study (they manipulated the study by manipulating these stocks [easy to manipulate small caps stocks])
3. The study was not well publicized. Many traders continued shorting these 1000 stocks as up-tick stocks. They did not know that they can short them on a down tick and waited for an up-tick before shorting (it distorted the study)

EQ

I love volatility! I support anything that makes the market more volatile. Let's blow up a few hedge funds every month or so to add even more volatility. If we could get 500 point swings in the Dow everyday, I'd retire and trade for a living. In fact, given the sh*thole Wall Street has created in the underlying economy, I may be forced to do that.

Volatility likely has more to do with other factors. Maybe like hedge funds spreading rumors, historical correlations killing black box trading, etc.

dave

1. Sample error? Quite possibly, but certain not due to "very small sample size."
2. Ah, must be the workings of the Sith Lord.
3. Hilarious; they are powerful enough to manipulate markets, but too stupid/lazy to keep themselves informed? Yeah, that is how traders stay in business.

stretcho44

During the pilot phase, the trades were very closely monitored by the SEC, paid consultants and several university groups.

WHY would anyone wanting the rule overturned take advantage of it during this time?

The reports submitted to the SEC did show some increased shorting of small company stocks because any change was too hard to hide. There is not much chance seeing any effect in larger companies.

The Russell 3000 chart pattern was not unexpected. July 11, 2007 when the rule was lifted is the peak. Since then, the shorting of the Russell 2000 and 3000 index ETF has grown to the point where the short interest on the Russell 2000 ETF (IWM) is 150% of created shares and is #1 on the short interest list.

Shorting is a valuable part of the process but should not be on equal footing with ownership. With small cap companies, shorting now has an advantage over owning shares. If you own stock in a small company, you now have to take the risk that the shares will dramatically drop in value simply because someone decides to work the stock prices for profit.

Chris

The elimination of the uptick was to address low trading volumes? So much for that theory. Trading volume up until the last month has been LOWER since the rule was removed. Cramer has been on Wall St. for over 30 years and when he says removing the rule was idiotic, I agree 100%.
There simply was no legitimate reason to change the rule. If it ain't broke don't try to fix it, moron!
Just another in a series of misteps that have injected chaos into the market. Kind of like doing away with Glass-Steagall. Yeah, that was absolutely brilliant. It resulted in trillions of dollars in capital being destroyed. When you forget the lessons of the Great Depression out of extreme "hubris" you need to learn the hard way. That's just what the Lehman, Merrill, Bear Stearns crowd has learned. Idiots.

Karen

I am a Canadian financial planner and I agree completely with the comments above that the 'longs' -- which is the typical investor here, due to restrictions as to who is allowed to buy into alternative strategies (i.e. only 'sophisticated investors' with minimum investments and minimum net worth)-- are severely handicapped in their abiity to prosper in the markets. We deal mostly with people who are in retirement or near retirement. I'm not sure I can recommend that they stay in the market after this one!

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