Cramer, Seriously, Shut the Fuck Up About the Uptick Rule

Jim Cramer is the market's very own Don Quixote.

He's been obsessing over the uptick rule, a bit of exchange arcana that required a stock's value to increase before a short position could be placed. It effectively slows coordinated, large short positions from being placed at the same time. He uses a lot of stupid rhetoric here:

What’s even worse, though, is that a lot of the safeguards Franklin D. Roosevelt put in place to stop another Great Depression are gone. SEC Chairman Christopher Cox did away with the uptick rule, which prevented short sellers from shorting a stock until it first ticked up in price. The result is a group of bear raiders virtually unchecked and able to drive down the market at will.

Yes, Saint Roosevelt's '34 act and '40 act regulated this aspect of the market. Yes, Christopher Cox did away with the uptick rule. And it has fuck all to do with anything - stop namechecking great regulators and make more sensible suggestions.

Cramer doesn't seem to understand how synthetic positions and cheap options plays can be used to achieve effectively the same impact as actually selling a name. If I write uncovered calls or purchase institutional-size buckets of puts, I'm doing the same thing as going naked on a short and continuing to avoid the muss and fuss of asking the nice men at the SEC if I'm allowed to bet directionally on a stock's performance.

He likes to create this vision of a shadow cabal of "bear raiders" but really EVERY financial stock got the shit shorted out of it in 2007 by just about every hedge fund, individual, institution, etc. While the rating agencies created a huge problem by basing ratings on stock performance, creating the potential for spiraling rounds of downgrades, this is really only hitting financials - hence the ban. "Bear raids" really only work when you can't see balance sheet assets or if a company borrows a lot, because credit rating impacts or uncertainty will cause an investor to look at a massive short interest as a warning sign. And even then you need to be right, like any other directional bet.

The uptick rule can't do a thing about any of that. It's a bear market, and we're all bear raiders now.