Now that the financial markets are under pressure, leaders in Italy and Spain decided to announce a ban on legal short selling. Just another attempt to regulate in a depression.
I believe that short selling provides future buyers in a declining market. The attempt to regulate trading will likely backfire as investors decide the market is a rigged game and not participate. At least in Las Vegas, I know a slot needs to pay off sometimes.
It is O.K. if short sellers get caught in a short squeeze, but not alright if they profit from mismanagement of companies. Does that sound fair? The reason I like the VIX as a hedge to a declining market is it soared today is that regulators cannot attempt to control volatility. Volatility is a natural reaction to further panic by investors. Look for future attempts by leaders to continue to ban, regulate, manipulate, and control the economic winners and losers. However, the public is smarter this time and may revolt to further attempts to save savers and investors at the expense of all taxpayers.
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