March 9, 2009
Please see below!!!! How appropros. Sarah Young Fisher
Sarah Young Fisher , CFP, ChFC, MSFS
President, Kuntz Lesher Capital LLC
Kuntz Lesher Capital LLC
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March 9, 2009
Sent to me, but meant for you.
March 9, 2009
Ms. Fisher
I want to thank you for your comments about theuptick rul from a recent edition of the “Jnvestment News”/ I agree with you emphatically on every point of your message. You might have seen my letter to the editor on the same subject recently. Below is a summary of what I gave them in case you care to read it. I don’u know what it will take to get the country’t leaders to accept the fact our economic system is potentially under attack without an uptick rule to hold back relentless short / hedge fund selling when there are few buyers on the horizon at this point of general fear in the minds of regular investors. I have tried to contact Members of Congress and other leaders but to no avail. I am quite frustrated as you appear to be. Best wishes in your efforts to get the uptick rule back in place and enforced.
UPTICK RUL REINSTATEMENT A MATTER OF NATIONAL SECURITY: Request for your assistance to force SEC to reinstate the Uptick Rule immediately. The SEC terminated the uptick rule on July 6, 2007. Since then, our markets have been more volatile than needed. The lack of an uptick rule has allowed short biased hedge funds to nearly destroy our financial services segment and specific stocks as they sold shares that are out of favor. At present, no buyers are required to step in before they short again. The losses from this increased downdraft have cost investors many Trillions of dollars more than would be likely under current economic terms. It has also contributed to a lack of investor confidence, which simply compounds the problem. I consider the lack of the uptick rule to be a matter of National Security because a rogue nation can short stocks far lower than they otherwise could with far less capital invested (without the requirement for buyers to enter the market between short transactions). We want a secure nation from a military standpoint. However, we are wide open for a financial terrorist attack at any time from outsiders with oil, drug, or other large amounts of money. Charles Schwab (the famous brokerage house owner) and Robert Pozen (head of MFS Investments) have recently written editorials in the WSJ supporting reinstatement of the uptick rule. SEC is currently bogged down with high profile investigations of swindlers such as Bernard Madoff and Arthur Nadel. The dollar volume of these cases pale in comparison to the importance of a reinstated uptick rule.
I also suspect that short interest from hedge fund bear raids is no longer being accurately being tracked. I have identified some examples of stock prices reacting wildly to news that might be tied to excess short interest not otherwise reported. Our economic system can be destroyed in a short period if the uptick rule is not restored and enforced rigorously. Financial and insurance stocks may be past a point of recovery but without confidence in our system, the whole economic system could be lost.
The culprits in these short / bear attacks:
1. use short selling (without an uptick rule), especially for out of favor stocks or sectors
2. purchase Credit Default Swaps (CDS) on target stock debt
3. people buy puts after seeing debt CDS prices rise
4. individual and institutional owners sell when options activity swings bearish
5. credit rating agencies downgrade stocks from risk of default (whether warranted or not)
6. investors are afraid to buy back in as a result of fabricated fear
7. the cycle starts anew.
Sincerely,
Bradley R. Teets, CPA/PFS, CFP®!
March 5, 2009
Guys, when are you going to reinstate the “VpTic Rule? I trusted that Mrs. Shapiro would implement the reinstatement in January!!!! Heavens, are you going to wait until there ist a stock market anymore
Sarah
Sarah Young Fisher , CFP, ChFC, MSFS
President, Kuntz Lesher Capital LLC
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March 5, 2009
They are both linked together. The same people buying Credit Default Swaps on companies are shorting the stock. They have INCENTIVE to do so. Back in the 1700's in London, you could take out insurance policies on anyone. Soon the insurance companies noticed a rise in murders of the same people that happened to be insured. They soon put a stop to the ridiculous practice....will we
Best Regards,
Christopher C. Ginder
VP Portfolio Manager
Kuntz Lesher Capital LLC