At This Time of Unprecedented Volatility – Bring Back the Uptick Rule
The US stock market is an invaluable source of wealth creation providing people the opportunity to mutually own shares in some of the most important and most successful companies in the world. Wealth creation is not only important for a few, it is important for every investor and for the future wellbeing of our entire Country.
At this point in time of unprecedented volatility, individual investors are again questioning the single most important aspect of the stock market – Trust.
Without trust or confidence in the stock market, our Country has the potential of losing generations of investors that truly need to grow wealth for the long run.
We are talking about wealth that must be there to put people in a position to retire and live out their later years on their own dime.
Being that investor trust is at stake, it’s time for the regulators and congress to act in fairness for the people. Fortunately, the needed legislation won’t take much time as the debate over what is needed took place over 70 years ago after the market crash of 1929.
A simple rule created by the Securities Exchange Act of 1934, called the Uptick Rule must be reinstated to preserve trust by the masses in our stock market.
The Uptick Rule simply required there to be an uptick or “buy” in a security prior to selling short. The rule was designed and implemented to prevent bear raids during harsh economic times.
This rule worked very well for almost 70 years until being removed in 2007. Since 2007, our markets have suffered massive volatility for the benefit of a few and at the expense of investor confidence.
Reinstating the Uptick Rule is the single most important thing that Congress can do for investor confidence but it’s not the only important issue.
Congress must take a long hard look at the fairness of how the markets trade and level the playing field for everyone.
– Bill Batie has been working with individual clients for over 25 years and specializes in Portfolio Management and Investment Planning. Bill resides in Albuquerque, NM with his wife and 4 kids.