Day traders; this may sound a bit dramatic, but at the rate the SEC is going with the regulation of short sellers, this might become the next headline!

In my blog post yesterday, “SEC Adopts New Short-selling Rules,” I commented on the SEC’s latest move to regulate naked short-selling. Even though I agree on restricting this activity, I expressed my opposition to wining politicians wanting to ban ALL short-selling of financial companies like banks and insurers. Banning short-selling goes against the principles of free market economics, where supply and demand dictate the price of a commodity. It makes total sense for traders to want to sell stocks short of companies that are in trouble - and now, what a better bunch to sell the crap out of than the glutton banks and insurance companies that fattened their rear ends out of the latest real estate mega bubble?

Early this week, it seemed that the excess was beginning to get squeezed out of the market at full speed when stocks began to suffer severe losses; but then, what happened later in the week? Regulators stepped in with their sloppy, patch-up-the-holes mentality and began regulating the “evil” short sellers. Things got even more dramatic today when the shorting of 799 financial stocks was banned altogether.

In the MarketWatch article, “SEC bans short selling in 799 financial stocks,” SEC Chairman Christopher Cox is quoted saying,

“The emergency order temporarily banning short selling of financial stocks will restore equilibrium to markets. This action, which would not be necessary in a well-functioning market, is temporary in nature and part of the comprehensive set of steps being taken by the Federal Reserve, the Treasury and the Congress.”

That’s just too funny! With the phrase, “restore equilibrium,” the Chairman seems to imply that the market has to go up to be in balance. Nonsense! These financial stocks should suffer for their excessive greed. Why should they go up? The same holds true when he states that the short selling restrictions won’t be necessary in a “well-functioning market.” If it ain’t going up, something must be broken?!?!?

Fellow stock day trader, this is why I strongly suggest that you don’t day trade stocks. What for? The stock market is one of the most manipulated markets in the world with blatant favoritism for rising prices. The forex market is a much “cleaner” and “purer” market for day trading. I strongly suggested that you take our free, live day trading webinar and find out more.

But what about for “longer term” investments; “aren’t stocks the best asset class for that?” - you ask. I know that financial planners and stock brokers have been preaching this since the dinosaurs, but that’s all they know. It’s one of the big lies our society is founded on.

If you want to learn about alternatives that, in my honest opinion, are much better than stocks for the long run, dare to give us a call (305-600-4651). But please note: you will have to make an important choice when you dial - if you want to take the red pill or the blue pill. It will all depend on whether or not you want to find out how deep the rabbit hole goes!

“The SEC [Securities and Exchange Commission] adopts rules against naked short-selling,” writes Marcy Gordon of The Associated Press. I laughed my assets off when I read this headline just a few hours ago. This is why I love forex (or foreign exchange) for day trading so much better than stocks.

I’m not saying that naked short-selling should be allowed, but things like this always happen in the stock market during times of crisis (like today when the Dow dropped over 4%). There are so many stupid regulations in the US stock market to control the price of stocks that one might wonder how “free” of a market the stock market really is.

You never hear forex day traders blurb out terms such as “curbs in” or “halted for news pending,” when referring to the buying and selling of Euros, Dollars, and Yens. It’s really quite silly how regulators attempt to control periods of high volatility in the stock market. Many traditional investors and traders (by that, I mean folks who believe that stocks are the best thing since sliced bread) actually swallow the moronic excuse that such artificial price controls are there to protect investors when the world is “freaking out.” Nonsense.

A free market should be allowed to fluctuate by the laws of supply and demand. If traders want to take the stock of a greedy insurance company who got caught with its hand in the real-estate-bubble cookie jar to zero, so be it (anyone got life insurance with AIG? :). Why does the government have to use my tax dollars to bail them out?!?!

Let the system implode from its own avarice I say. We’ve been screaming bubble when it comes to stocks and real estate for over three years now during our managed account webinars. The best way to get rid of a bubble is to let it blow up; not to patch it up with rules against short selling. If you’re trading stocks, how else would you make money when the market is getting hammered other than by selling short?

Apparently, our government doesn’t even want us to sell short stocks anymore. In the same AP article, Gordon states, “Sens. Charles Schumer and Hillary Clinton, New York Democratics, asked the SEC to temporarily ban all short-selling, not just naked short-selling, of stocks of major financial companies.” That one made me pee in my pants (can I say that here?).

If you are a day trader or want to take up day trading, please do yourself a favor and get out of the stock market. Trading currencies, in my humble opinion, is much better. If you don’t believe me, sign up for our free day trading webinar by clicking here.

If you want to read more about the naked short selling mess in the Associated Press article, here it is: SEC adopts rules against naked short-selling