In 2008, Lu Xinzhi, the author of this column, heard and witnessed the various truths of the financial tsunami in North America. Nine years later, when the financial crisis was circulating in the market again, I still found the live recording written in October of that year, and everyone would appreciate the shocking clips of the era at that time...
Wall Street Shocking: A feast of short sellers
When I woke up in the first week of October, many people would feel that the world was becoming so strange. In addition to the US financial crisis, a national strike broke out in Belgium, and Iceland faced the danger of national bankruptcy. Russian stock market plummeted 19% in a single day... On the same day, the Federal Reserve, the European Central Bank and four other central banks carried out unprecedented emergency synergistic interest rate cuts.
Wall Street is closest to heaven and closest to region
Now, it is no longer whether Americans can afford to live in subprime mortgage crisis , but how the whole world faces the financial crisis. As early as this spring, when the author started writing this book in North America, he repeatedly reminded that the financial bad debts in the United States will not end so easily, and we must make enough "pessimistic preparations". But today's situation has exceeded the worst expectations of the American political and business community.
The United States and the whole world are in a financial panic, and it is actually caused by American houses. Originally, the subprime loans of hundreds of billions of dollars under American debt consumption were only packaged into high-quality securities assets by various financial institutions and rating agencies, and the risk was amplified to hundreds of times the original one. As a result, once the American people cannot afford to pay the payment, whether it is manufacturers (banks and mortgage companies), processors and sellers (investment banks) or investors (social security funds, public funds, hedge funds, etc.), they all become an online grasshopper and fall collectively.
From the surface figures, the subprime mortgage crisis in the United States has evolved into a financial crisis, and the core lies in the securitization and expansion of subprime loans. At present, there may be certain bad debts in real estate loans in the mainland, but because mainland financial institutions have no time to carry out "financial innovation", the risks have finally not expanded. However, real estate has been combined with the financial industry and cannot be avoided.
houses made American Dream , and also destroyed the American Dream
fell sharply on Monday, rose sharply on Tuesday, and plummeted on Wednesday. US stock emotional this week has always been rare. Many institutions that I am familiar with have been missing recently, and their position adjustments have been very passive. Holding a position is dangerous, and you are afraid of missing out on the short position. Many fund managers with more than ten or twenty years of experience have almost surrendered these days. There is a Guangdong proverb that says "Blind punch kills the master", which is exactly this situation.
9 September is a great day. Stock markets around the world are in full swing with major central banks joining hands to save the market. American investors find it even more incredible because the U.S. Securities and Exchange Commission actually released an extraordinary move that 799 financial institutions are not allowed to short stocks.
Originally, the short-selling trading method in the North American securities market has existed since memory and is also considered a magic weapon for the US stock market to avoid risks. However, this time, in order to curb the chaos in the financial market, the US Securities Regulatory Commission (SECh) had to take action and did an extraordinary move. SEC Chairman Christopher Cox declared that the U.S. Securities and Exchange Commission promised to use all weapons as much as possible to fight the threats faced by investors and capital markets. When it was not a solution to ban short-selling financial stocks, it was obvious that the US financial market had reached a critical moment, and the US securities regulators had already forced this powerful medicine. Although there is a temporary constraint until October 2, it is enough to feel that it has undermined the spirit of the free market. During the direct attack on Wall Street on CNBC, many scholars have emerged from angry criticism of this move, believing that it is to protect speculation and shake the foundation of the country. The tone is quite similar to that in mainland TV channels.
Nasdaq changed its face overnight
Regarding short selling, the three major exchanges in the United States, New York Stock Exchange NYSE, US Stock Exchange AMEX and Nasdaq Securities Market Nasdaq are all allowed. Short selling is like option OPTION, which is a main method of arbitrage for institutional investors.It is since the subprime mortgage crisis last year that US stocks have fallen continuously, so more and more traders have joined the short-selling camp and made money from the US national crisis.
Normal short selling refers to the speculative behavior of stock investors when a certain stock price is bearish, borrow the stock from the broker and sell it. Before the actual delivery occurs, they will sell the stock in full and make up for it. During delivery, they will only settle the difference. If the stock price really falls in the future, buy the stock from a lower price and return it to the broker, thereby earning the intermediate price difference.
The first step to short selling is that brokers are willing to borrow stocks to investors, so the transaction time of short orders is often longer than the transaction time of buying orders. At the same time, in order to curb all short-selling in free fall, the exchange has a "report to rise" principle for short selling, that is, when the stock is falling all the way, investors cannot short selling. They must wait until the next rise of the stock (report to rise) before they can place short orders (ETFs are not subject to this condition), even if it is just a rebound of one second. Therefore, when short selling, it is often not easy to sell at a good price.
Financial trading is like a dance on the blade
. In recent years, the popular barely short selling means that traders do not have to borrow stocks, but in order to control risks, securities companies generally collect high margins for traders. However, hedge funds tend to be abundant, so there are often huge sales in the market sometimes. Because the electronic matching system for US stock trading is very efficient, sometimes when the number of short selling transactions of a stock increases greatly, short selling may even be much larger than the actual total circulation of the stock. This may be very powerful to suppress the stock price, because the main force does not have to worry about whether they have stocks in their hands or whether they can borrow stocks, which is to use money to suppress people. There is a company that is very familiar to the mainland. After it went public in the United States, it has been repeatedly blocked by such naked short selling, and its stock price is often defeated, which makes the company very troubled. Later, someone wanted to write a letter to the US securities authorities to complain, demanding to curb naked short selling against this company, which was quite troublesome. Therefore, two weeks ago, the US Securities and Exchange Commission issued a unified document, prohibiting such naked short selling, which is purely caused by money.
Obama caught up with the aftermath of the financial tsunami
In fact, in the traditional US stock market, short selling is only regarded as a short-term behavior. Investment and trading books will remind short sellers not to have a long-term fight, and investors who have just entered the stock market should avoid it. Short selling of stocks has certain special risks, that is, investors' possible losses are unlimited, while those who go long will lose all their principal at most.
