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25
Reuters reports that the US Government is looking into the short selling of healthy banks : PacWest rises 15% on the news. (media.communities.win)
posted 2 years ago by TheImpossible1 2 years ago by TheImpossible1 +32 / -7
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– SmallTimeTrader 1 point 2 years ago +1 / -0

Are you perhaps conflating legitimate speculation with abusive forms of market manipulation like insider trading or cornering? If you're thinking of manipulation (which is often illegal) I can see your point.

Legitimate speculation, however, is very useful to efficient market function. For example, speculators provide liquidity, aid in price discovery, allow market participants to offload risk when there might not be a natural counter party, and more.

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– CatoTheElder 2 points 2 years ago +2 / -0

All speculation is bad. A transport company at least moves the good from one place to another. All a speculator does is move a good from one time to later time, reducing the ability for humanity to use things when they are more useful. A speculator adds no value, creates no inventions, consumes energy for no gain, and are the definition of useless eater. Kill them all.

Imagine playing a 4x game, and all your resources are controlled by speculators. You would fall so far behind as they hold on to a resource waiting for a better price.

Edit:

aid in price discovery

I need to add that the price of everything is infinite when speculators have their way. Just observe the Boomers throwing everything their parents built away just to live another few months.

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– SmallTimeTrader -1 points 2 years ago +1 / -2

I agree that there are some negative impacts of certain kinds of abusive speculation. However, I think that perhaps you may not appreciate quite how valuable the services speculators provide to markets are, primarily in regards to liquidity and price discovery. If you search the literature on this you can read plenty of research that concludes speculators are quite positive for markets, but let me try and provide a couple simple examples that I hope get the point across.

First: liquidity. Speculators provide a large chunk of the liquidity in any given market, and a more liquid market benefits all participants in several important ways. The speed, price, and depth (amount) of product you can transact all vary inversely to how liquid a given market is. If there are speculators in the market you will be able to buy more product at a better price more quickly than if they are not in that market. These are all tangible (and quite valuable) benefits that speculators are providing to you, the market participant. I can give you concrete example of why this is the case if you like.

Second: price discovery. Let's say you've done some research and have reason to believe that oil is likely to go up in price because some politicians are curtailing exploration and production due to some wild-eyed ideological reasons. As a result you take a speculative long position in a one year forward crude futures contract. If many speculators (or a few large speculators) have the same belief the price on that forward is going to rise. A rising price is a signal to other market participants to produce more, or that the policy is ill considered, etc. The value of that price signal is hard to overstate -- all of society benefits from it -- and it is only available because speculators are able to move price in response to their own projections on what ought to be the right price.

I could go on (and on) about this. Finance is my job and I participate in markets daily. The thought of outlawing speculation upsets me because I am 100% certain that it would lead to worse outcomes for market participants and for society at large. I hope you will reconsider your position.

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– CatoTheElder 1 point 2 years ago +2 / -1

You are the enemy.

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