Stock Market Stupidity: 4 Dumb Things That Happened This Week
It was a bit of a crazy week for Wall Street. It was made even crazier by bits of stock market stupidity that appeared. Over at The Street, Simon Constable offers 5 dumb things that happened this past week on Wall Street. Here are 4 of them:
- Securities and Exchange Commission makes a rule against naked short-selling. First, though, you probably want to know what naked short-selling is. Basically, it’s when you sell shares short (figuring on a loss to the company) without borrowing some shares beforehand. The SEC made a rule against naked short-selling Fannie Mae and Freddie Mac, and indicated that this could become a more widespread rule. Silliest thing about this rule? Short-selling is illegal. The SEC should already by busting naked short-sellers — since it is illegal to begin with.
- Henry Paulson, and the government sponsored enterprises Fannie Mae and Freddie Mac. This one sort of overlaps to last week. First, Henry Paulson, the Treasury Secretary, adamantly stated that there would be no bail-out for Fannie Mae and Freddie Mac. Then he did an about face and announced measures to help the two companies. Constable points out that idiocy of this whole mess is that the government ordered Fannie and Freddie to take on additional (and risky) debt to help homeowners, thereby causing the trouble in the first place.
- Blaming Schumer for IndyMac. Government regulators, in an effort to blame someone who isn’t a Republican for some of the economic mess, rushed to say that it’s Charles Schumer’s fault that IndyMac failed. What did he do? Expressed concern about IndyMac. But the fact of the matter was that IndyMac was hemorrhaging well before Schumer’s remarks.
- Wachovia tries to hide its assets. Wachovia refused to reveal its assets relate to auction-rate securities. As a result, the headquarters was raided. So investors could get information about what was happening with their money.
So, watch out! As things continue on this track, more stock market stupidity is likely to ensue.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions.
Tags: stock market, naked short selling, investing blog, stock market stupidity,
Fannie Mae, Freddie Mac, Schumer IndyMac
