Overstock CEO Patrick Byrne is now paying people to promote his epic Wall Street conspiracy theory. At a site called Deep Capture - yes, Deep Capture - Byrne and his fellow theorists recently published a nearly 40,000-word treatise detailing his claims that Wall Street, the Wall Street press, Wikipedia, and the Russian mafia …
You guys are far off the mark on this one
Byrne is 10,000% correct on his views regarding naked short selling and the wikipedia.
You're supposed to afflict the comforted, not suck their cocks.
For Sale: One Bridge (several to choose from!)
Oh, you mean I need to have it in my possession first. I was just going to buy it back from you for nothing as you realized it was of no value.
Fact, Fiction, and Entertainment
It's really too bad that Patrick had to get himself tied up with the Sith. If he hadn't got involved with the dark side he might be more relevant in the media/Wall Street.
Regardless of his obvious entertainment value, he is absolutely correct in his views of market manipulation tactics and their effects on individual businesses and the overall world economy (because you know that Wall Street is responsible for the well being of the rest of the planet)
I make it a policy...
...to hate people who use the word "incentivising" and really mean it.
Radio Free UK
In the guise of telling us what a whacko he is, you successfully advertise his name and ideas to a large audience. Valis thanks you.
"We're incentivising people to go out and inject Deep Capture out into the public discourse."
You can laugh, I know I did, but it actually makes logical and linguistic sense. Whether it should be encouraged is a different matter.
This guy may be right in saying that lots of people on Wall Street (and elsewhere in the financial markets) are doing a lot of illegal things to make more money. However, I am a bit sceptical that the Russian mafia would have warned him - if they weren't making money out of him and he was causing them problems, they would have more likely arranged for him to be hit by a big truck.
Short selling is good
Short selling sounds like a scary evil tactic employed by evil Wallstreet traders. It is not.
Stock Exchanges around the world allow short selling. If a professional investor is selling short he is sending a message that he thinks the company is worth less than the current price. If short sellers get it wrong and sell a good company then they will push the price artificially low - and another company will take it over at a cheap price. When a large number of professionals short sell the same company it means one of two things:
1. They are in an evil conspiracy out to get paranoid CEOs.
2. The company is worth A LOT less than the current price.
Overstock has made a loss in 17 out of the last 19 financial quarters, with no real sign of becoming consistently profitable. Their CEO spends way too much time on his crusade and not enough time trying to fix his company.
Hmmm... now where's my $30k?
Alternative Entrepreneurs... Shadow Investors
If the services provided by a Russian mobster are anything like any number of other Russian mobsters whose services always guaranteed satisfaction of expectation, one must salute the model when it causes no harm.
i was going to use lots of words like incentivising to drive the cirby crazy but to lazy to do that and write my business plan for the i just brought with the profits from selling my shares after i got a good tip for a wall street broker.... oh er i i'll get my coat it's the one next to the group of russian gentlemen in suits
Whether or not it's legal, the short selling is a tricky thing.
It's a nice way to ensure that overvalued stock sheds some of the value, but it can also run away madly (like that recent bank - forget the name) and that really bites.
In that respect, you're missing:
3. A rumour is causing the misinformed to make bad judgement calls
Naked short selling is an evil thing and should not be tolerated. ever.
and a very good counter-point
The simple explanation:
OverStock does not make money, it looses money! Added to the mix is that the CEO is .... let's just say somewhat excentric .... then it it obvious than one must short the stock.
The only manipulation is whenever OSTK rises ...
Alas , Wall Street has been running on empty and fumes since the Chairman Ronnie Era of politics and required a massive multi trillion top up which was enough to drain and financially bankrupt the entire US Banking System and Federal Reserve of every last dime in 2001 requiring them to denude the cashed up European Banking and Pension System .
Now the only way forward to pay for all this mess is to punch the price of all basic commodities like oil to USD$250 per barrel minimum !
As for what happens in 2012 to the retiring longer lived baby boomers is any one's guess at the best of times !
Choices will be fatal for large slices of the worlds population !
Naked short selling = short selling
Why did the extra word have to get stuck in there?
JKG used to rant against leverage - and he was probably right - it made '36 a lot worse than it had to be - but he realized he was pushing against the inevitable. These things happen in any financial market - regulation begets avoidance begets regulation.
The best thing is the people that matter in this whole thing don't give a s**t what Byrne or Cliquipedia think, write or do - their words thoughts and deeds are just so much inconsequential fluff.
@ Colin Millar
"Naked short selling = short selling"
Not exactly-- the signficant difference is that when short selling you are normally supposed to borrow the stock first or at least make sure that you can borrow it.
Naked short selling means you sell shares without bothering to find a way of borrowing them.
It's hard to know how much naked short selling goes on, but a possible sign is a spike in the number of trades where the shares aren't actually delivered in the required period (around three days).
Maybe I'm misunderstanding...
But isn't the difference between short selling and naked short selling the difference between actually having something to sell (or a contract on a future purchase) versus selling something you don't have at all with the hopes that you'll be able to buy it in the future at a lower price in order to cover your obligations?
It seems if you are able to flood the market with something that doesn't exist, the price will almost certainly go down if the scale is large enough, but the last person to buy is the one left holding the bag -- kinda like a giant ponzie scheme.
To win, we are not looking for a "publicity stunt" necessarily.
I wrote one blog at DeepCapture ("So You Say You Want a Revolution?") full of pretty vanilla suggestions, and links to make it easy to write newspaper editors, Congressional delegations, FINRA and SIFMA etc.
Of course, PR stunts may work too.
The community selects the winners.
What I dont understand is...
If I pay a grocer a dollar for an apple. If the grocer doesn't provide said apple the grocer will be prosecuted.
If I pay a stockbroker for a share in an apple, if the stockbroker doesn't deliver said share... nothing happens to the stockbroker?
How is naked short selling different from fraud? What am I missing?
A Number of Improvements...
The community also selects its leaders, Patrick. .... with their own Captcha Program and they're Good at Providing Masks/Smoke and Mirrors for Unhindered Play.
I love being nude in the markets
Naked short selling is tricky,
If the short seller get's it wrong then they have to go buy it *at whatever price the market sets* which means they could lose a lot.
Since they take a market risk it is a valid investment tactic. That is not synonymous with moral. Or even legal.
If on the other hand it is being done to manipulate the price, well that is illegal. But then so is buying shares to manipulate the price, as is starting or propagating rumours to affect the price.
In essence if the purpose is to manipulate the price then it's illegal.
If it's being done for financial gain only then it's (probably) legal.
The problem with naked short selling is unlike with almost any other market transaction there is no natural limit. You could short sell more than the entire market capital of a company, which would obviously depress the price. However when you had to cover your short sell at the end of the period then you would get a certain amount cheap because of the depression in the price, but then the price would spike, and because there simply wasn't enough stock to cover your sales it could peak to infinity, and thus the regulators *might* actually notice what was going on. Oh, and you'd go bankrupt. And to prison.
So naked short selling is not without risk for the short seller, even beyond what happens if they aren't manipulating the market and simply get it wrong.
But anyway - with covered shorting the limit is the number of shares in issuance - well not theoretically, but in practice anyway, whereas with nakeds you can actually get into a positive feedback loop. It could all be terribly messy, and kill the short selling company.
The only entity involved in the whole thing who doesn't necessarily get hurt is the company involved, as if it simply goes off and makes a profit then eventually the share price will revert to it's natural level. Of course instead if it's a share issuing, loss making, cash burning nightmare of a company then shorting, whether naked or not will hurt, but more because it points out that the emperor has no clothes than because of any manipulation. Unless the CEO had got involved with the Mafia (Russian or otherwise) and got on their bad side then no group would put their head far enough above the parapet to distort the price deliberately.
If the market is being manipulated then the affects will be gross and obvious, and share prices will spike *dramatically*.
Regarding Overstock? Move along, no story here. Certainly no paranoia of a CEO who perhaps made some deals he shouldn't have.
Oh, and if you get the $30,000 - make sure it's cash not stock....
"If I pay a grocer a dollar for an apple. If the grocer doesn't provide said apple the grocer will be prosecuted.
"If I pay a stockbroker for a share in an apple, if the stockbroker doesn't deliver said share... nothing happens to the stockbroker?
"How is naked short selling different from fraud? What am I missing?"
The answer is, you are missing nothing at all. you have it exactly right. Some lawyers in some backrooms ahve dressed it up with a lot of fancy terminology, but "FTDs" ("Failures to Deliver") when done purposefully, are absolutely fraud. But as a crime it is beautiful because your broker keeps sending your sttements saying that you ahve those shares. What he does not tell you is that, for every share your broker is holding, he may be telling 5 people the same thing.
Spot on - and here's the kicker - if you had the cash to risk manipulating the market like that there are ways to do it which are
a) less blatantly illegal
b) carry much less risk to your cash
Fraud is crime of intent - i.e. - I sell you something with no intention of delivering it. Its nothing like short selling - naked or otherwise - which as John pointed out would be a crime of price manipulation. It does seem like the accusations are starting to go off at wild tangents here.
I wonder how you got that name....
Not Short Selling - Naked Short Selling! WAKE UP PEOPLE!
If you have done any trading in the pink sheets. You wonder why you always lose your money and the company goes under. After doing extensive research I found in the last 5 years over 3000 companies have been run into the ground through naked short selling. Naked short selling is the practice of brokers selling shares of companies in which they have no shares. Or they have a million and sell ten million. Its easy for them to do, because all they do is put an electronic marker in your trading account. They can get away with this practice because the SEC never monitors the brokers. A good example is a case in CMKX. CMKX was sold to the tune of 3 trillion shares in the US alone. Estimates range as high as 7 million globally. And where was the SEC? Months went bye and CMKX traded billions of shares every day. The price never budged. Never changed. It stayed at .0001 for months. The biggest traded stock in the history of the stock market and where was the SEC? This is very real. And is spreading into larger companies. And this is very scary. I beleive terrorist are using our markets and our money to finance thier war on us. The SEC and Congress has done nothing about it. While we the people continue to write and fax them, showing proof in black and white. Last year the head of the SEC when asked about naked shorting stated "there is no naked shorting, just shareholders crying over thier shareprice going down. I'm happy to say Mrs. Nazzareth has retired from the SEC, maybe with the twist of her arm?
So maybe changes are coming but far to slow to suit WE THE PEOPLE! Naked Short Selling is becoming more noticeable. Keep your eyes and ears open. You have not heard the end of it.