Why financial market short selling is unfair to the majority of investors

The news gracing the pages of papers and internet sites all over the world during the last six months and most definitely over the last couple, more so than famine, war and all the other 'usual' items deemed worthy of news is that of the financial markets. Everyday the media looks to sensationalise events, oil up or down, mortgages failing or not, banking system collapse etc....but there is also talk about the impact of short selling and impact it has on the direction of the market and the wealth reallocation amongst individuals.

Like many of us who understand or at least pretend to understand the financial markets, main ones being the Dow, FTSE, Hang Seng, Nikkei, we probably tend to agree with a nod of our heads that short selling has its benefits. It was meant to allow a short-term hedge on a long position, whether physical or synthetic or likewise would be used to call-out companies that weren't so strong financially as they seemed. Hedge funds, short sellers continue to stick with this line that they are doing the world a favour by short selling all these stocks to 40, 50, or even 90% of it's current market value. Well if they count the world as their investors I guess they have it right.

The part I would have an issue with from a moral perspective is that many funds, and thus normal investors/the rest of us, are not allowed to short stock and must via mandate hold certain percentages of shares in the major indexes. Pension funds, mutual funds etc are not as flexible in terms of investment strategy as any hedge fund, specialist asset manager or even day trader with a margin account. So this means the majority of the population loses wealth which is re-allocated to the minority of the population who are able to invest this way.

Whilst the losing mutual and pension funds gain a small return by lending stock to the short sellers, who cares when they lose in excess of 50% of the fund's value in that stock. Particularly, as one piece of research shows, fund managers generally have little of their personal wealth in their own funds. Meaning they are not losing their money, but that of their investors.

So until the rules change that permit anyone to short sell the financial market playing field is stacked against the average everyday investor. My advice; learn to invest on your own terms and take your money out of any fund that is not flexible in respect to investment strategy. The writing on the wall says that long only funds will not continue to do well as the market will not automatically continue to rise - therefore short sellers will rule the market. Knowing this don't just sit on your hands and hope for the best. Act today and take your financial well being into your own hands

It's how you adapt to a situation or event that is important

The natural tendancy we have in life, when facing or experiencing a particular situation, is to live in the present and exhibit an emotion based on this. Whether that be making or losing money from an investment, starting or finishing a relationship, being accepted for a new job or being fired, or even landing in a strange country and feeling out of place - the natural reaction is based on that exact moment in time. If it's determined to be positive your emotion will be as such and if negative likewise.

However little do we realize that the current point in time is just the current point in time and there will be thousands of those moments in the future. What we also ignore is that it's how we react in each momemt that will determine the events and thus emotional reaction in those future moments. When we experience the good times then for many of us it is 'good times forever' and no planning is made for the correction (that occurs as equilibrium in life)or we choose not to accept it. When the less than good times roll around then often it is all about self sympathy and stress rather than planning and putting in place a foundation to take advantage of the future up cycle.

Therefore this leads to the conclusion that it is more important in what you do to move from one present point in time to the next present point in time rather than where you actually are. Let me explain..

If you are in a great situation presently it is not enough to congratulate yourself on where you are - though I would most definitely do that. It is imperative that you take the actions necessary to help ensure that your future life maintains this standard based on your values and purpose at that time. Likewise if you are in a unattractive or undesired situation in the present it is not about only reflecting on where you are today but more important that you identify and act on those steps you must take to move to a desired future point. The reason I say this is that current experiences are not always within your control...but what you do to move forward are and there is no excuse if you do not act.

Conclusion....don't get arrogant in the good times or depressed in the bad, but rather focus on the steps you must take to help ensure as best as possible that your future 'living in the present' experiences are what you truly want.