Bobhjon's  Instablog

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Retired Army Colonel making D-Day landing on Omaha Beach PhD in Biological Chemistry Over 40 years of personal investment experience Trustee of 14 Trust accounts Specialize in Small Cap and high dividend stocks
  • Naked Shorting 0 comments
    Jul 3, 2009 8:19 AM | about stocks: NRF

    Poor, little NRF (Market cap=$185M) gets hit every morning with a massive short sale, probably "naked", which drops the price by 10-15%. Then, during the day, small, retail, value investors(PE=0.30;Book=$18.75, yield=14%) work the price back up towards $3/sh. Each day the same cycle repeats, and the stock price ends up going nowhere. Why?

    Last year, after a lengthy study, the SEC required that in order to short a limited number of financial stocks, the shares had to be pre-borrowed. But the Investment banks complained that pre-borrowing was "too expensive", so the SEC dropped the requirement overnight. If Goldman and the others can't afford to follow the rules, then they should stop shorting.

    It has long been recognized that Goldman and the other Investment Banks made the majority of their fabulous profit by trading. And much of that was by trading against the retail investor,i.e. you and me. In order to qualify for TARP money, the Investment Banks had to convert to normal chartered banks. So what changed? They still make most of their money by trading against us.. Now, they want to repay the TARP funds so that they can continue to pay huge bonuses which they have to do or they will lose their best people. Who are the best people? The tellers? The accountants? Perhaps the loan officers?

    No!!! It's the TRADERS whose activities they shouldn't be in anyway as a chartered bank.

    Stocks: NRF
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