With the computerization of trades, and computer algorithms and code created to make trades on the market automatically, I really think that it’s easier to take advantage of regular investors.
Take Herbalife, for example… When the famous hedge fund titan David Einhorn just questions some statements in Herbalife’s quarterly report, this served as a sell signal for all of the other shorts out there, and they caused the stock to drop over 15%! It has continued to slide from that point, but currently seems to have leveled out a bit.
With the Uptick Rule, such a quick devaluation of the stock would not have happened so dramatically. It’s obvious that once Mr. Einhorn expressed his concern, all of the other hedge fund manager flooded the market, with selling moves on that stock, this caused it to drop like a stone on really no news at all. Oh sure, the hedge fund managers didn’t meet the week before and cook up this plan (or did they?), but once Mr. Einhorm expressed his views, it pretty much served as a massive sell signal to all of the other hedge fund managers out there.
To me, this is kind of a predatory approach to the stock market that many hurts us non-hedge fund individuals. On the other hand, if the “Uptick Rule” was back in place, it would have dramatically change the outcome of that day. You see, many of the hedge funds make great profits in volatility! The Uptick Rule lessened that volatility big time!
There is a movement against the top 1%, but I say they should focus their attention towards the hedge fund companies and managers! They are one of the largest creators of inequality that I’ve seen lately, especially with the complete computerization of the stock markets… Let’s focus on the panic creators in society that make wounds deeper than the need to be. After all, to attack the top 1% seems harsh… after all, who really wants to protest either Warren Buffett or Bill Gates?
What is the government going to re-enact the “Uptick Rule”? This is something that is making the rich richer, and the middle and poor classes poorer. If not the “Uptick Rule”, then how about something to reign in the hedge funds companies, who’s practices seem a bit unethical and counterproductive to the entire purpose of the stock market…
What do you think? Am I off base or wouldn’t it be nice to make the stock market a fair place again? A place where you invest in a company because you want to own that company, not take advantage of the regular investors!