[jeffbee]

What you are suggesting is a one-sided market where prices can only go up and there is no restoring force. That's dumb.

What's worth knowing is that immoral conspiracies among short sellers are incredibly rare. I challenge you to find a documented case. By contrast, there have been many, many pump-and-dump sell-side scams, and without the short side there would be many more.

[TheCoelacanth]

> What you are suggesting is a one-sided market where prices can only go up and there is no restoring force.

Aren't there other ways to take a short position on a stock without actually short selling it? Like buying a put option?

[jeffbee]

That's a way to profit from the price falling but it doesn't serve the price-finding function of the market because it doesn't actually increase the supply of shares for sale.

[cwhiz]

One sided? You buy, and you sell. The price goes down if there are more sellers than buyers. This is how it worked until the “professionals” invented all of this ridiculous nonsense so they could gamble on the markets.

Buy or sell. And nothing more.

[jeffbee]

Short selling came in the seventeenth century with the rest of stock markets. You can’t really have a functional market without it.

[cwhiz]

Yes, you certainly can.

[jeffbee]

Your position is essentially that the price-finding function of stock markets is not necessary, in which case I wonder why we have the stock market at all.

[cwhiz]

Your position is that the price-finding function of the market is the ability to short. This isn't required in ANY other market.

If there are more buyers than sellers, the price goes up. If there are more sellers than buyers, the price goes down.

We don't need uninvested third parties literally gambling on the outcome of the above. The market will work just perfectly fine with just buying and selling.

[jeffbee]

In another kind of market I can just enter the market. If the price of chairs goes bananas because someone has decided to buy and hoard all the chairs, I can make chairs, therefore increasing supply and restoring a normal price.

In the stock market the number of shares of each issue is fixed, so that doesn't work. This is why the short side is important for price finding. They inject supply into markets even when the long side is trying to manipulate the price up.

[aynyc]

In that case, you would need to get rid of derivative markets and perhaps leveraging mechanism such as margins.

I do believe banning certain instruments from the market can have a positive effect, but I'm not sure if short-sell is one of them.

[cwhiz]

Just because something has existed a certain way doesn’t mean it is the optimal way it should exist. What is the fundamental point of having a stock market?

Fulfill that purpose, and the leave the gamblers to find something else to do for a living. They add no value to the market or to society.