Overstock CEO offers $75,000 for Wall Street's soul

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)

Words

"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.

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?

was planning

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

Interesting topic..

Good article..

http://www.ft.com/cms/s/0/807ad036-4089-11dd-bd48-0000779fd2ac.html

and a very good counter-point

http://www.ft.com/cms/s/0/080cde2c-3ccf-11dd-b958-0000779fd2ac.html

and another...

http://www.economist.co.uk/finance/displaystory.cfm?story_id=11591349

Alas

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.

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....

@John Stirling

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

@AC

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.

@heystoopid

I wonder how you got that name....