is now a good time to buy shares?

[Fear ón Srath Bán]

muppet, are you in favour of betting as a basic, financial or otherwise, of any societal system?

[Bogball XV]

What I dont like is that is seems that there are people in the stock market ether who benefit form driving a price down when it has nothing to do with the performance of the company in question. That to me is fundamentally wrong.

I haven't read all the above as I'm trying to watch the Corofin game, however, short selling won't pay off unless the price of the company's share being targeted is fundamentally wrong.  You can short sell all you want, but if the market does not agree with you, you lose money, thus the problem wasn't short selling any more than it was long buying as prices went up to unrealistic levels.

In general many derivative products are dressed up types of gambling, that's fine, as long as the gamblers (investors) realise that, the problems recently came about because they thought risk been removed , there was no transparency, the people at the top of companies had know idea about what sort of products were being traded, they became derivatives of derivatives of derivatives, impossible to audit or value, but as long as profits were apparently rolling in, who cared.

Some derivatives are essential, namely commodity based derivatives, a case can also be made for derivatives based on interest rates and exchange rates, but what benefit is there for allowing derivatives of share prices?  How do they facilitate a company's ability to trade?

[Fear ón Srath Bán]

So you (too) think that betting is fine as a mainstay of an economy. Mummy, why are we in the shit?

[muppet]

muppet, are you in favour of betting as a basic, financial or otherwise, of any societal system?

That question is too general for me.

Are regards betting on shares I realise that there is an entire industry based on this and any suggestion to ban it wipes that industry out.

BogBall your argument is the perceived wisedom at the moment as far as I can see.

however, short selling won't pay off unless the price of the company's share being targeted is fundamentally wrong.  You can short sell all you want, but if the market does not agree with you,

The problem is even the market can never agree how to value a business. In a crisis like we have now the performance of or real value of a business seems to be irrelevent.

Burlesconi let a comment slip this week about shutting down the markets. I suspect they (EU) might be close to doing that otherwise we will have no businesses left to work in.

[Fear ón Srath Bán]

OK, do you think that the current (naked greedy capitalist) system can survive?

[muppet]

OK, do you think that the current (naked greedy capitalist) system can survive?

I think it probably will sadly as history shows we never learn from anything.

There are two problems though.

The international one and the local Irish one.

The Irish one will only change after a revolution which is unlikely, let's face it.

Internationally the biggest gun wins, so no change likely there either unless Putin or China start to flex their muscles.

[Caid]

Neither he nor the CFD house own the shares?
They are all borrowed from a Brokerage??

I think this is likely to be correct in most instances.  A hedge fund or potentially an institutional investor may lend the shares to either the CFD house or the investor himself

a. 25% is a serious stake in any business, who owns the voting rights? Mr. Q, CFD House or neither.

The voting rights with be with whoever bought the 25% stake. If the CFD brokerage borrowed the shares from a hedge fund, the hedge fund and not the CFD house will have the voting rights.  Someone with a long or short position in the CFDs does not own the shares nor have any of the attached voting rights.  

CFD investors are not required to divulge shareholding details. Rather the intermediary responsible for the CFD (e.g. a brokerage or a hedge fund) is required to declare their own involvement.

However, the CFD investors may essentially have full control of voting rights through the intermediary, without actually owning the shares.  Investors can fairly easily convert CFDs into underlying shares courtesy of the counterparty, which holds the stock to hedge its exposure.  In this way, investors can build a significant stake in a company in secret and at a lower cost than if their intentions were known to the market.

b. Does the brokerage buy the shares as part of the transaction or do those in the transcation (Mr. Q and CFD house) have to find a brokerage that happens to hold shares in the desired company?

The ultimate party on the other side of the CFD transaction will have bought the shares be that a CFD brokerage or a hedge fund.  That transaction will be separate to any subsequent CFD trades but the counterparty will buy/sell shaes in the company to hedge the CFD positions it is taking out

c. How does this type of transcation typically expire? With the Mr. Q type owning the shrares? Or is it merely a gambling exercise and the shares are always owned by the brokerage.

It is gambling plain and simple.  With CFDs as the shares are not actually exchanged there is no stamp duty. Making it "cheap" gambling (mixed in with the leverage aspect which means greater potential gains/losses).  The shares are owned by the brokerage but I think the CFD provider may agree with you that you can convert your position into shares in the company.  Sean Quinn apparantly had a paper loss of €1bn on Anglo Irish which he unwound and converted into a 15% stake.  

There was also a lot of press because of the anonymity and the fact you can built up a anonymous quasi-stake in a company.  Outside of takeover periods the acquisition of CFDs is not a notifiable interest. However, the purchase of these instruments can enable a CFD holder to close that contract at a later date then purchase stock which was held by a counterparty in relation to that arrangement. Thus a stake builder can acquire very substantial amounts of shares quickly without making a disclosure until they have acquired well over 3% of the company's shares.

BogBall's post is a good summary

[muppet]

Thanks for all that, I think I half understand. 

[orangeman]

I think most people thought we'd reached a bottom in November - but the markets have taken a real battering this past few weeks.

[heganboy]

Depends on your definition of an expert and why would you mention trading it then to a lad who
is looking up to you for advice?....that's what is dangerous here!

You could trade on the volatility but that is a dangerous game.

You highlighted the first half of the sentence only. Did you not see the second half?

His question referred to a recent jump in Irish bank stocks. I was mentioned 'trade on the volatility' to point out that was the type of investment he was talking about. And I clearly pointed out that it was dangerous. Also it was opinion not advice.

actually vol trading and ultra shorts are where the money is right now. VWAP and LWAP are very profitable assuming you have a co-lo and ultra low latency connection. Or of course if you have sub milli access to dark liquidity pools the current volatility leads to a lot of imbalances allowing for low latency arbitration but that mightn't have been what you were asking :-)

[orangeman]

Depends on your definition of an expert and why would you mention trading it then to a lad who
is looking up to you for advice?....that's what is dangerous here!

You could trade on the volatility but that is a dangerous game.

You highlighted the first half of the sentence only. Did you not see the second half?

His question referred to a recent jump in Irish bank stocks. I was mentioned 'trade on the volatility' to point out that was the type of investment he was talking about. And I clearly pointed out that it was dangerous. Also it was opinion not advice.

actually vol trading and ultra shorts are where the money is right now. VWAP and LWAP are very profitable assuming you have a co-lo and ultra low latency connection. Or of course if you have sub milli access to dark liquidity pools the current volatility leads to a lot of imbalances allowing for low latency arbitration but that mightn't have been what you were asking :-)

Jesus !!!!!

[muppet]

Depends on your definition of an expert and why would you mention trading it then to a lad who
is looking up to you for advice?....that's what is dangerous here!

You could trade on the volatility but that is a dangerous game.

You highlighted the first half of the sentence only. Did you not see the second half?

His question referred to a recent jump in Irish bank stocks. I was mentioned 'trade on the volatility' to point out that was the type of investment he was talking about. And I clearly pointed out that it was dangerous. Also it was opinion not advice.

actually vol trading and ultra shorts are where the money is right now. VWAP and LWAP are very profitable assuming you have a co-lo and ultra low latency connection. Or of course if you have sub milli access to dark liquidity pools the current volatility leads to a lot of imbalances allowing for low latency arbitration but that mightn't have been what you were asking :-)

Jesus !!!!!

Cool, we need a Messiah.

[Tyrones own]

actually vol trading and ultra shorts are where the money is right now. VWAP and LWAP are very profitable assuming you have a co-lo and ultra low latency connection. Or of course if you have sub milli access to dark liquidity pools the current volatility leads to a lot of imbalances allowing for low latency arbitration but that mightn't have been what you were asking :-)

Yes I actually did alright last yr trading the QID/QLD ultra's..Nice High open interest at the time and i see the Spy Ultra's are now following suit.

[bcarrier]

LOL Heganboy...

[/quote]

actually vol trading and ultra shorts are where the money is right now. VWAP and LWAP are very profitable assuming you have a co-lo and ultra low latency connection. Or of course if you have sub milli access to dark liquidity pools the current volatility leads to a lot of imbalances allowing for low latency arbitration but that mightn't have been what you were asking :-)


[/quote]

and the software solution is .... ?

[nifan]

actually vol trading and ultra shorts are where the money is right now. VWAP and LWAP are very profitable assuming you have a co-lo and ultra low latency connection. Or of course if you have sub milli access to dark liquidity pools the current volatility leads to a lot of imbalances allowing for low latency arbitration but that mightn't have been what you were asking :-)

Is it bad that i dont understand a word of that