Banning short selling

Today, Vishesh (my boss) raised a peculiar question – why the government is not imposing ban on short selling in the stock market. Ahan!!! Being a strong believer of market, I disagreed. My reasons are simple – if you do not ban unprecedented rise of stock market, then why to curb market forces in time of downturn? And just like uptrend, downtrend is also a fact of market lifecycle. Tools like short selling and margin trading are legalized for a reason and that reason is to earn money. I know the very concept of margin trading and short selling reeks of gambling; but hey who am I to question such things? If wiser people have made them legal then a person like me can and will use them to earn money. Who doesn’t? If I’m taking the risk of shorting a stock, then I must be eligible for the profits (if any). People have this notion that money can be earned from stock markets only in bull runs. But if you play smartly, bear market also gives you plenty of opportunities to earn pocket full of moolah.

Coming to the question again – Isn’t it against the whole concept of market? He said that people are earning money off other people’s misery. I was not very amused by this statement because the statement was very oxymoronic. Capital markets never cared for emotions and welfare. I know that loads of people are severely affected by the savage downturn, but that doesn’t mean that government should go out of the way to help them. If a person is taking a risk of investing his/her hard earned money in a legalized gambling den, then he/she shall be solely responsible for it. Government’s only role is to monitor the market for illegal activities like inside trading or stock operators. I am sure I’m not leaving a good impression on any comrade with my ideas (although I must confess I really like the idea of socialism), but such is the nature of capitalistic market.