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written by reader Negative Consequences to Individual Investors As A Result of Excessive & Naked Shorting of Equities

By mosley1234, October 20, 2016

Take TG Therapeutics as an example, it has gone from 9.57 to 5.89 in a matter of 5,6,7 trading days scaring or forcing novice investors out of a position that will eventually recover.

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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SoGiAm
5 years ago

$TGTX long – Hi Mosley. This equity is very well covered by the Gummune here: http://www.sgumdev.stockgumshoe.com/2016/09/sea-of-tranquility/

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Travis Johnson, Stock Gumshoe
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TGTX isn’t currently on the “failure to deliver” list from what I can tell, which indicates that it’s probably not naked shorting (“naked” just means that you don’t find a place to borrow the stock before you sell it short, which can sometimes happen because brokers will often let you do a short sale instantly even though it takes a few days to find the shares to borrow and clear the trade sometimes).

The price can be impacted by negative interpretations of events, of course, but the real value of the company can’t be impacted, so “pile on” short selling can give fundamental investors a great buying opportunity if their analysis or ability to predict the future is better than that of the short sellers.

There is more of a “momentum” short trade these days then there was a decade ago, thanks to the removal of the “uptick rule”, but I think they’re actually better at slowing down “naked shorting” these days.

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