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Is there a difference between shorting and buying?

No leh! AK. One should confirm whether he's a shortist first before giving a helping hand. If he is not, pls save his life for the sake of human ground lah!

AK_Francis      ( Date: 23-Sep-2008 10:16) Posted: ha ha, unknown short seller on Hongxing last Fri n failed to recover end of the day. SGX forced buy-in for the burger, n he faced 1 m loss. BT said. budda jump over the wall liao. those staying in high rise buildings, pse watch out for stranger loitering around your corridor. give him/her a hand if they jump.

 

Singapore Exchange tightens rules on short-selling

 

ha ha, unknown short seller on Hongxing last Fri n failed to recover end of the day. SGX forced buy-in for the burger, n he faced 1 m loss. BT said.

budda jump over the wall liao. those staying in high rise buildings, pse watch out for stranger loitering around your corridor. give him/her a hand if they jump.

 

Shortist are "bad guys"!!! They are those who throw stones.....of course not at normal circumstances but during when someone fall into a well or manhole or something similar??? Hohoho!

 

ok, surf the below for more indept understanding on SS. And today stock market highlight, heavy pernalty will be imposed for SSler, All papers said.

http://www.investopedia.com/university/shortselling/

 

BT 23 Sep 08

Published September 23, 2008

Unknown short-seller hit by $1m loss SGX initiates buy-in for shares against short-seller who fails to cover his position   By VEN SREENIVASAN   SOMEONE out there is licking his wounds after taking an almost $1 million hit after a naked short-selling adventure that went badly wrong.   The Singapore Exchange (SGX) yesterday initiated a buy-in for a huge chunk of China Hongxing shares against a short-seller who had dumped the stock last Friday but failed to cover his position before the close of the session. In all, the SGX yesterday bought-in some 13 million shares of the mainboard-listed Chinese sports shoes and accessories maker at around 35.5 cents per share. This was to cover the short sale of an equal amount of shares at around 25 to 27 cents per share during last Friday's session. Besides taking a loss on the price difference, the short-seller also took a hit on the transaction fee of $40 per block transacted, and a higher brokerage rate of 0.75 per cent on the deal. Market insiders reckon the loss could stack up to around $1 million. 'It is just plain stupid for anyone to have engaged in naked short-selling in this kind of a market,' remarked one institutional dealer. 'The least they could have done is to get scrip borrowing facilities lined up before shorting the stock.' No one whom BT contacted could say who Friday's short-seller was, but speculation centres on hedge funds. Intra-day short-selling is quite common on the SGX, and institutions which do overnight short-selling avail themselves of scrip borrowing-lending (SBL) facilities earlier. OCBC Securities has the largest SBL account facility here. What also baffled many market insiders was the fact that the short-selling was done at a historic low price for the stock - something which would have immediately raised eyebrows and attention. China Hongxing, which a year ago was trading at around $1.40, has been on a seemingly inexorable decline over the past 12 months, in tandem with the market. It closed at 33.5 cents yesterday, a two-cent gain, on a volume of 60.4 million.

 

 

Shorting on borrowed shares is not right, but shorting and covering positions within the time limits of the rules T+2 or T+3, is not objectional as it could help make the market lively.

Regarding resources, if you short and use a borrowed share to cover the position, this shortage in real life is still open. Why can't you close your position as per normal? Why borrow?  In other words, you are just scribbling your debts on the walls.  Wait till someone come and pay on your behalf. That is, when the market falls further then you close the position.  But if the market does not fall, you will still have your writings there.  How I wish all areas of life can be the same as able to sell on borrowed things!

Uphill walking and downhill walking, are similar action of walking, but there is a difference. One is tough the other is easy.  Well there strong people around and they will find no difference between the two.  Same with investing, buying by man in the street, and shorting by syndicates or manipulators.  Big fund managers are around, yes.  How many people are able to match the cash available for share investing like Mr. Oei Hong Leong and Ong Beng Seng?  You see, fund managers are the minority in the seas of many hundreds of thousands of investors who are limited personally by their cash in the bank.

 

How can there be a disparity when one shorts on borrowed shares? He/she is still trading on the same px of the same class of share of the same counter.

I find very amusing to note that many investors perceived that Shortists always make money. Shortist too can lose their pants if they got it all wrong like any other Investors.

It is very misleading to say that Shortists have the advantage of resources over other Investors. There're a lot of Investors out there with huge Funds too waiting to snap up 'over-sold' Companies. And no shortist is so foolish to short a well-managed Company with huge reserve and a strong balance sheets. Cheers!

 

Personally, I think shorting on CFD is perfectly ok, but shorting on borrowed shares is not right because there is disparity.  A shortist has the ready resources of shares lying in a huge pool ready made for him whereas an investor (buyer) will have to accummulate (manufacture, to be crude) money first to enter the market.  Thus when there is too much shorting on borrowed shares, there won't be sufficient buyers with ready money to absorb the sales (shorts).  When extremely overdone (shorting) it ultimately ends in the market crashing.

Furthermore, shorting on borrowed shares tend to border on the side of manipulation of the market. Supposing I had DBS as a target, and I use the measure of the average daily volume traded and then borrow two to ten times that to sell.  Do you think there will be a ready buyer as the price stays up? If I am a shortist, I will have no qualm for selling down DBS on the way down to $2.00 with borrowed shares from those who buy as the prices fall lower and lower.  I just use their shares to return them scriptlessly for their money until they every buyer is dry.

But selling CFDs is acceptable because it has lesser impact on the consequences of market movements.  No seller can manipulate the market through selling (short the market) CFDs on and on.

 

I have not traded with CFD yet and I heard that only selected stock is allowed for short sell as compared with normal share trading.  For example, among the 30 STI Stock, some is not allow to trade with CFD Shorting.  Is this true?  Thanks in advance.

 

When you short, you've no intention of owning the shares. The Shortist must also have ready fund to cover his short position or arrange to borrow shares for the same purpose from his Broker or Stockist at a fee.

When you buy shares, you've entered a contract with your Broker to take delivery and pay for the shares at a given date (3+1).

In both cases, if you default, The CDP will buy-in for you at a higher bid. Cheers!

 

Hi, my question can be answered this way:

One buys when one has the immediate money and willing to part with it but one shorts when one has no immediate money or is not willing to invest or part with it.

This is the difference.  And if this is true which is the fairer sex?