Shorting the DOW During the Debt Ceiling Debate and Make Money

DOW Down Over 500 Points

Source

Whose making money when the DOW is down?

Everyone who has stocks and that has shorted the stocks is making a killing in the markets right now. And while making money is not a crime the fact that this is occurring as a result of Congress who created the psychology of the market in which it has fallen over 500 points and they are refusing to tax those who shorted the market through the debt ceiling debate this means speculators are still welcome in the stock market. It screams inside trading for the likes of which the SEC should investigate every last person who has shorted the market right now.

I only find this odd because I thought the Obama administration has had a goal to cut speculators out of the market.

And while many will see this as a buying opportunity it is also disastrous for our country. It makes it highly improbable corporations will be able to hire and therefore unemployment will remain at a record high if not increase.

I remember after 9/11 I tried to buy oil warrants from the Bank of New York and I was told I would be investigated for such behavior. In other words I was not allowed to buy oil warrants. As a matter of fact I don’t even believe oil companies sell warrants any longer.

So if I wasn’t allowed to buy oil warrants because it was considered “unpatriotic” after 9/11 then why aren’t all the people who have shorted the market during and after the debt ceiling crisis being investigated?

Exactly, what is the difference between buying oil warrants after 9/11 and shorting the stock market during and after the debt ceiling crisis?

But alas there is hope. If the market makes a quick correction which it did back when Barack Obama was first elected the market went form about 7,000 to 11,000 in a relatively short amount of time. The individuals with short contracts can lose their stocks and marginals can be called in. It is one of the reasons I didn’t buy shorts in this market environment. I don’t usually bet against America. And I think those that have through this debt ceiling crisis need to pay their fair share of the karma especially since they will not be paying any taxes on the monies they have made from the down turn in the market.



What Does this Mean to You and Me?

Great buying opportunity as we are coming out of war. There is always a post war pop in the market ask the Rothchild's.

And you have to wonder why the 500+ members of Congress game the stock market at the expense of corporate America and the taxpayers to subsidize their already over paid income? And they do this all at the expense of the country and of the tax payers.

Congress threatened every all of America so they could short the market and caused great hardships for Americans so they could short the market and make money. It is time all of Congress is fired and that includes everyone that is new and that did't vote for the debt ceiling to be increased especially for those who didn't vote for the debt ceiling to be increased. The Tea Party Movement has committed treason with this debt ceiling stunt and the insider trading they have done to profit from this stunt. They should all be jailed.


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Comments 12 comments

Mr Tindle profile image

Mr Tindle 5 years ago

JT Walters,

We need less regulating and investigating by the SEC. In fact, if a real financial "solution" had been reached at the end of the debt negotiations, the SEC would be cut down to a much smaller (less expensive) size or even better, closed down.

With that said Congress probably is executing trades with insider information. I already saw it reported somewhere that Eric Cantor owns TBT (havn't confirmed it though) a security designed to go up when T-Bond prices go down. There want be any investigating of Congress's insider trading though. And even if there was there would be no real consequences, since members of congress are completely immune to insider trading laws.

I wrote a hub about this btw, check it out if you want.


jt walters 5 years ago

Congress isn't immune from prosecution but I will check out your hub. Congress may not be prosecuted but they can be, they don't have immunity.

Sorry I read hubs just about everyday and somehow I missed yours. I'll check it out.

Thnaks for reading, commenting and providing feedback.

JT


Brupie profile image

Brupie 5 years ago

Shorting is a practice that has always made me nervous. Instead, I've tried to keep a bit of cash in my portfolio for precisely these types of dramatic drops. It's an old-fashioned "buy low and sell high" mindset, but I'm not trying to make my money in an afternoon. I know the companies that I think are solid and when the opportunity presents itself, I buy and hold.


JT Walters profile image

JT Walters 5 years ago from Florida Author

Yes, I did this when the DOW was at about 7000. I bought LMT at $50 and GD at about the same price. But I do like cash right now nad I try not to dollar cost avergae on the way up but that doesn't look like it will be a problem until we pull out of the war. I also bought ASA and KCG which were good investments. I like to double my money and get out as a rule. It isn't hard when you buy at times when the DOW is down to 7000.

You have a good investment strategy.

JT


Mr Tindle profile image

Mr Tindle 5 years ago

JT Walters,

Not to be disagreeable, but it is most certainly true that Congress has the lawful privilege to trade on inside information that they gather during the course of their work. For example say a congressman or woman knows about an obscure last minute addition to a piece of legislation that they also know is likely to be passed. It is perfectly legal for that representative to then go to their broker and make an investment in a stock that will benefit from the legislation. This can all be done before the news is available to the public and its all legal. Now it is possible they may come under fire for ethics violations and those sort of investigations (although that is rare as well), but they will not risk prison. To be clear this is only if the inside information relates to their role as U.S. representative. So as long as the get the inside information from their work in Washington it will be legal for them to trade on.

Hard to believe, I know, but I document it all in my hub. There I provide a link to a news item about on Daily Finance.com a site owned by AOL/Time Warner (Real Main Stream Stuff). There is also a link to some Wall Street Journal reporting about a Finance professors research showing that the stock investments of the Congress have been well above average stock returns during the period of time he looked at.

This is a really good topic to discuss I think, because so few people are even aware of the amazing double standard.


jt walters 5 years ago

Not to be disagreeable either but they are not immune from prosecution. If they act on insider tradng information they an be [rpsecuted although I agree with you that is is unlikey.

To give you a simpler explanation if a broker suddenly has clients working in government buying up stock and they reccomend that stock to some of their clients they can and do go to jail. SEC checks brokers accounts to see if their clienst hold all the same holdings and if they do they can get their U4 messed up. So if a broker whose business it is to advise and sell stocks isn't even allowed to reccommenda high volume stock trade by government employees then I doubt congress can legally do this. I know it is against the law and they can and should be prosecuted.

But I understand tht they will not. They just need to hang one over this and it will end.

So less to like about Congress. So I say throw all the bums out!!!

Our country is being run by criminals.

JT


Mr Tindle profile image

Mr Tindle 5 years ago

JT,

Ok, I definitely agree that the broker might be prosecuted, although I doubt that would happen either, due to the fact that most of these elected Washington types probably place their trades through the most connected private wealth branches at firms like Goldman & JP Morgan.

Brokers are of course prohibited from insider trading, by law and could go to jail.

Congress specifically is a different story though. As long as the inside information comes to them as a result of their so called work in Washington, they are allowed to trade on it without ever being prosecuted. The link below is one I also provided as proof in my hub. The financial reporter even talks about legislation that was being introduced at the time to actually "Make Insider Trading Illegal" for congress, just like everyone else.

http://www.dailyfinance.com/2009/07/14/does-congre...

So obviously it is legal as of now, because why would any legislation be required if Congressional figures guilty of this could be prosecuted under current laws? Even lawmakers aren't dumb enough to pass laws that already exist.

But regardless Congress has been taking advantage of this privilege for years as research done by independent sources show that on average Congressional stock picks beat the market by around 12 percentage points.

I think this is just one of those things that people find so unbelievable that it can't be true, but unfortunately in this case it is.

But people really need to be aware of the double standard, because it's one reason that insider trading laws should be done away with.


Jt Walters 5 years ago

Hi Mr. Tindle,

You know you are right when it comes to Congress. I was thinking of these previous cases. http://www.cbsnews.com/stories/2006/03/03/politics...

But they relate to bribes Congress got from defense contractors and not the profits made from stock purchases. So Congress makes money on both sides of the trade. They get bribes to award defense contracts and then make record profits on the stocks and goodness knows the commodities.

I been working really hard producing hubs and haven't had a monent to get back to this subject until now. Thanks for clearing that up for me. it is a loop hole in the law and either way it needs to be closed for everyone. Ding business in America is expensie enough without Congress turning a profit on every single business transaction. It is like Congress taxes every bit of business the USA does.

Yes, I do think people find this hard to believe because they really want their leaders to be good sage people and sadly, they are not.

Thanks for clearing that up for me. I appreciate the education.

JT


Mr Tindle profile image

Mr Tindle 5 years ago

JT,

Thanks for reading the link and looking into it more. I try to provide high quality information on issues that are often overlooked. Especially issues pertaining to economics, business, & government. I will trying to keep up with your hubs in the future.


Jt Walters 5 years ago

Dear Mr. Tindle,

I appreciate your informative hubs and I too will keep up with you since you provide high quality informatiave hubs on rarely covered topics.

I look forward to reading you in the future.

All My Best,

JT


Bob Green Innes profile image

Bob Green Innes 5 years ago from Hamilton, Ontario, Canada

If you don't like the unpatriotic or unethical aspects of shorting, you're not alone. Here's a petition you can sign to register your displeasure.

Descriptive:

http://www.stopshortingstocks.com/

Petition:

http://www.petitiononline.com/shortNOT/petition.ht...


JT Walters profile image

JT Walters 5 years ago from Florida Author

Hi Bob Green Innes,

I especially thinks it is unpatriotic and unethical for politicians to short the market during debt ceiling debates. There are horrible conflicts of interest and insider trading issues.

I think the point is to Congress shorting the market not just the regular person.

Thanks for the petition.

JT

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