Comments on: Big Bad News Ban

By: The Problem with Confirmation Bias « On Finance and its Follies

The Problem with Confirmation Bias « On Finance and its Follies — Sat, 03 Apr 2010 11:23:19 +0000

[...] this type of bias manifest itself in finance? The always-invaluable Robin Hanson at Overcoming Bias writes: We’d love for things to go well. So we’d love people to think that things are going well. So [...]

By: Chad

Chad — Thu, 25 Mar 2010 06:59:44 +0000

The idea of “Bad News” has a greater implication here. I believe that the media doesn’t inform but instills fear into viewers. Most of the top stories are on death, destruction, financial hardships etc…

By: Proper Dave

Proper Dave — Mon, 01 Mar 2010 10:59:39 +0000

I agree, “banning of bad news” puhleeze.
At “worst” this is some (very mild) speculation tax.

By: short sales « Douglas Knight

short sales « Douglas Knight — Mon, 01 Mar 2010 04:57:41 +0000

[...] Hanson describes a tax on short sales as a ban on bad news. Many commenters complain that there is manipulation of stock prices by shorters. I’m sure [...]

By: Jeremy

Jeremy — Mon, 01 Mar 2010 03:20:17 +0000

There are lots of ways short sales can hurt things, one obvious example is that they can create a problem where there isn’t one. A stock price is a sort of vote of confidence. A low stock price, caused or encouraged by shorts, could lead to a lack of financing options which could cause bankruptcy.

I don’t understand why this is such a big deal to you though. Is there a new tax on buying puts, selling calls, or futures or options on futures? People that actually own the stock can drive down the price too.

Also a tax is not a ban. A tax on short sales is not a tax or a ban on news.

By: Tim Tyler

Tim Tyler — Sun, 28 Feb 2010 22:30:25 +0000

Perhaps searching for “Black Tuesday: The World’s Largest Insider Trading Scam” might help here…?

By: Robin Hanson

Robin Hanson — Sun, 28 Feb 2010 21:47:03 +0000

Folks, the only way that selling short can hurt anything is by creating the impression that things are bad, i.e., by communicating bad news. But realize that any reporter who can get reward for reporting bad news has an incentive to create bad news by making things bad. Why ban bad news via short sales but not bad news via newspapers?

By: Lo Statuz

Lo Statuz — Sun, 28 Feb 2010 20:44:55 +0000

This may be an example of the slack Bryan Caplan talks about. People demand that the regulators do something, so they do as little as politically possible.

By: Robert Bloomfield

Robert Bloomfield — Sun, 28 Feb 2010 20:10:28 +0000

There are structural problems with short sales that go beyond their information content. First, short sales require margin trading, which can result in liquidity problems and related volatility. Second, people with short positions can have an incentive to reduce economic opportunities and growth.

Both of these reasons have been invoked to justify the restrictions on short sales that are already in place. This change merely tweaks the details–it is not a ban, but more importantly the existing restrictions were already substantial.

By: Richard Silliker

Richard Silliker — Sun, 28 Feb 2010 19:18:58 +0000

That does not answer my question. However, I will try to answer your question.

I do not feel that any news should be banned. However There must be reciprocity.