RE:ANSWERS ABOUT SHORTINGThanks for posting something useful.
Agreed shorting is not illegal but givent hat shorting requires a person to sell the stock, this creates artifical selling pressure on the stock itself much like when there is a bull run and people are driving the stock price up. The only difference - and this is KEY - is the VERY few people are momentum traders that jump on the bandwagon when a stock starts going up. On the other hand, a lot of investors (particularly retail) have stop losses preprogramed. So by virtue of a "short attack", mass selling ensues artifically which creates enough of a downward pressure that you have stop losses triggering which then spirales into a massive snowball. This is particulary true when there is a small share float that is easy to manipulate. In a bull run, you chose to buy into it whereas in a short attack, youre forced to sell by a third party.
That is my problem with shorting. Its not regulated heavily enough to ensure that manipulation isn't whats driving the price down. Done properly, shorting definately has a place in this world but my experience is that in recent markets, there has been more manipulation than a real effort to correctly price a stock.