It was said last Friday September 19 that the Ontario Securities Commission had decided to temporarily ban on short selling certain stocks. This temporary ban had already been put into place by many other international authorities, like Britain and the US. This ban will begin now, until October 3rd. To those who do not know what short selling stock is, it is when an investor sells a stock, which he does not own, in hopes that it will drop in value, so that he/ she can purchase it for a cheaper price.The reason for this ban is to help smoothen the inconsistency in financial markets.
Link: http://www.canada.com/vancouversun/news/business/story.html?id=04a9ec8e-247d-4487-aabd-6ab5ade194cf
Now just because short selling is temporarily banned, it does not mean the sale and purchases of stock is not allowed: this goes for both publicly traded corporations and privately held corporations. With this in mind, financial statements and stock increases/ decreases may not be relevant to investors who run the risk of short selling. Many changes may occur from now until October 3rd, but these changes will most likely not be timely enough to help short sellers make financial decisions. After this ban, the representational faithfulness of all the international corporations will be accurate and dependable; of course, this fact does not affect private corporations as much, since financial information is not publicly presented on the newspaper.
This ban seems to be a good temporary staballizer for financial markets, but it might be pointless when it comes to a long term look at the financial markets. According to the article, there were already 800 stocks that had to be banned in the Toronto and New York stocks alone. If this rate continues after October 3rd, there may have to be a permanent ban for certain stocks. However, for many shareholders, this is a good time to take a detailed look at how well your corporation is doing; this could mean big purchases, or big sales of stocks internationally. After this ban, it will be interesting to see which corporations improve, and which ones worsen.
Sunday, September 21, 2008
Economics Ch1- Article: Running Out of Gas
Nowadays, paying $100 of oil is relief to many customers. This is most likely from the fact that a few months ago, back in July, the price of a barrel of crude was at an ultimate high of $147, but since then has dropped by more than 25%. However, this drop in prices is disliked by The Organisation of the Petroleum Exporting Countries(OPEC). This was brought to attention when Iran and Venezeula, two members of OPEC, demanded to cut output because of the slide in oil costs. Opec decided to keep its goal of 18.8 million barrels of crude a day, but cut 1.8% of output.
Link http://www.economist.com/finance/displaystory.cfm?story_id=12209376
This article relates to the topic in many ways. Oil is clearly one of the most scarce land resources in the world, which makes it quite surprising that OPEC is not making their price rates higher, just because of the fact that oil use may decrease from some of the rich countries. Clearly, they want to find a price that would satisfy their consumers and maximize profit. The fact that OPEC is constantly experimenting with the prices and production just goes to show that economics is a science. As oil becomes more and more scarce, it is almost guaranteed that prices will increase, and output will decrease.
It is surprising to me that OPEC has not risen the prices of crude/oil, but this is also understandable as well. With so many different ways to travel, such as public transit, biking, and simply walking, there is plenty of competition for OPEC and the many other gas/oil selling companies. On the other hand, there are many consumers, like travel agencies that must buy gas and oil, no matter what the cost; this is due to the fact that their travel buses, cruise ships, and airplanes all must have fuel to take vacationers to their destinations. At the moment, these prices look very good to consumers, but for certain, they will change as soon as a month's time, because the prices for certain scarcee resources are never consistent.
Link http://www.economist.com/finance/displaystory.cfm?story_id=12209376
This article relates to the topic in many ways. Oil is clearly one of the most scarce land resources in the world, which makes it quite surprising that OPEC is not making their price rates higher, just because of the fact that oil use may decrease from some of the rich countries. Clearly, they want to find a price that would satisfy their consumers and maximize profit. The fact that OPEC is constantly experimenting with the prices and production just goes to show that economics is a science. As oil becomes more and more scarce, it is almost guaranteed that prices will increase, and output will decrease.
It is surprising to me that OPEC has not risen the prices of crude/oil, but this is also understandable as well. With so many different ways to travel, such as public transit, biking, and simply walking, there is plenty of competition for OPEC and the many other gas/oil selling companies. On the other hand, there are many consumers, like travel agencies that must buy gas and oil, no matter what the cost; this is due to the fact that their travel buses, cruise ships, and airplanes all must have fuel to take vacationers to their destinations. At the moment, these prices look very good to consumers, but for certain, they will change as soon as a month's time, because the prices for certain scarcee resources are never consistent.
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