Quote of the Day: Uptick Rule

Straight dope:

"To suggest that the removal of this rule is causing the markets to go
down is to loudly announce ‘I don’t understand the credit crisis, and I
am incapable of ever understanding it.’

-Jim Bianco, WSJ

The article specifically mentioned Mario Gabelli, Martin J. Whitman, and Jim Cramer as opposing the elimination of the Uptick rule.


Blame Game: The ‘Uptick’ Rule Debate
WSJ, April 1, 2008

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What's been said:

Discussions found on the web:
  1. michael schumacher commented on Apr 3

    To keep calling it a “credit crisis” demonstrates the same lack of a brain…

    Uptick rule was removed to INCREASE volatility or plainly put allowing the common man to short any stocks whenever they want (wouldn’t want something like a pesky rule to get in the way of free markets) so that they Fed can roast them at any point they see fit.

    If you load them in the boat faster…..the faster you can sink it…


  2. mhm commented on Apr 3

    The uptick was dead since computer systems allowed automated execution of market orders.

    Example sending two orders:
    1) SS 1000 XYZ
    2) B 100 XYZ [this activates #1 and ALL other ss orders in the queue]

    There goes your precious uptick rule down the crapper. It was old and ineffective and it is great that it was removed.

  3. karen commented on Apr 3

    thank you, thank you, mhm.

    i am so sick of reading/ignoring all this banter about the up-tick rule that did not actually exist except for the individual trader. the brokerage houses/investment banks could easily work around it as you point out. it was unenforceable, and thus non-existent.

  4. vhehn commented on Apr 3

    yesterday cramer loudly proclaimed that shorts could destroy a company at will because of no uptick rule. today he gleefully proclaims the shorts are getting killed.

  5. blin commented on Apr 3

    The elimination of the uptick rule is one of the best SEC policy changes ever. The rule prevented speculators from cashing in on a fast free falling stock.

    Why would anybody oppose it? Let the free markets truly be free.

    I used to operate a daytrading operation and we found that the uptick rule compromised our ability to trade. There are truly enough daytraders out there to provide liquidity for just about any stock. In fact, I could almost argue that it is the daytraders who get caught in long positions during a downdraft since they are the first to react to their perception of a stock becoming cheap.

  6. Ross commented on Apr 3

    The Senate passes a bill to give home builders a tax break. The cynic in me says that the NAR and NAHB will now begin giving donations to those they have enlightened.

    The optimist says “we need to encourage home building to increase the inventory’.

    This is one sick country.

  7. mhm commented on Apr 3


    I’m an individual trader and I used the work around now and then. It was particularly useful in thinly traded stocks.

    The rule was there and being respected. The ‘problem’ was the automated execution of market orders. All you needed was a 0+ tick.

    blin’s “…it is the daytraders who get caught in long positions during a downdraft…”

    Anybody who trades without an exit plan _in place_ has nobody but himself to blame. Part of the cost of doing business is insurance; pay for it and fear not any up/downdraft.

  8. karen commented on Apr 3

    mhm, again, thanks for the info. i don’t have a margin account so i can only use the etfs to short (and i don’t play options.) i did check into the via some brokers and was told that “it didn’t apply to the them because they could work around it.”

    the fact that naked shorts exist indicates that they can pretty much do whatever they want :)

    i’m just a little guy (girl)…

  9. fen commented on Apr 3


    For some reason, my email will not send to your email on this blog, so I have to post this here even though it has nothing to do with this particular post.

    I know you like Dick Bove and since he is getting a lot of folks back into the banks, perhaps you should post this upgrade of Citi by Dick late December 2006. A simple on-line search will show some rather spectacular bullish mistakes on his part regarding the financials, dating back to 2000. I’m not sure why he should be trusted at the juncture. I know you say he was early on the credit crunch, but he has literally top-ticked certain financials more than once. And by the way, around the time Dick was getting everyone to buy citi at 55 saying it was going to 68, John Hussman was saying credit was actually rapidly contracting. So it was not impossible to see this coming then.


  10. tbapple commented on Apr 3

    I’m still waiting for Cramer to interview Patrick Bryne of Overstock.

    They both seem to believe in some vast Bear Wing conspiracy.

  11. Dave commented on Apr 3

    Wow, thank you. At least someone has the sense to come out and say it. The other morning Cramer was on BSNBC and wouldn’t stop crying about the shorts and the removal of the uptick rule. If the uptick rule is put back in place, we should also have a DOWN tick rule, where a stock has to tick down, before someone can get long. I want to see what Cramer has to say about that!

  12. Tom commented on Apr 3

    If we need an up tick rule to stop the shorts, wouldn’t it make sense that we need a down tick rule to keep the bulls from running up Apple and RIMM

  13. joe commented on Apr 3

    Those arguing for an uptick rule on shorting should also be arguing for a downtick rule on buying.

  14. DonKei commented on Apr 3


    If you haven’t you should go see “No Country for Old Men”.

    I imagine the fed as the guy who walks around killing people–occasionally at random on the flip of a coin, occcasionally for cause–w/ the compressed air device otherwise used for slaughtering cattle.

    You never know for sure when it will come. You just know it will. This country truly is no country for old men…or any other kind for that matter.

  15. Ross commented on Apr 3

    Hey DonKei,

    Thanks, I’ve heard good reviews.

    Say, you are in rice growing country. Seen rough rice prices the last few days? Wow, someone is very worried about foodstuffs this year.

    If memory serves, about 8 countries have export controls on grain, the last was Egypt.

  16. Eric Davis commented on Apr 3


    You know that almost every state legislator, is caught up in being either a builder or a developer, in this cycle. It’s a reach around from the federal legislators for the local politicians, to help keep every body in power.

    This is how it works in my state, our legislature completely removed liability for just about anything, for both developers or builders, in our past session.(regardless of how illegal that is, but they don’t let them damn lawers get in the way around here)

    it’s how it works, one dollar one vote.

    Sometime next year they will finally get to some help for home owners…. It will probably come in the form of an increase to food stamps… because that is where most of them will be by then.

    I’m not advocating “Bail outs”, but I find the Trickle down/Supply side nature of them…. Amusing.

  17. AGG commented on Apr 3

    I would love to find out who invented the term “gaming the system” as a euphemism for lying, cheating and stealing without remorse.
    Ah, the pliability of the English language.

  18. Peter Davis commented on Apr 4

    As much as I’d like to bash Cramer (because really, who doesn’t?), I’d like to offer a different take. I have done a lot of personal development work recently, and this has revealed a lot about me, much of which has informed my trading. (which is why I’m posting it here)

    It is very easy for any of us (certainly it is for me) to get wrapped up in our own opinions simply because we need to be right. As many of us know, this is a very dangerous thing in the financial markets. Personally, my need to be right has really hurt my trading and has also caused me a lot of unneeded stress.

    I think a lot of what we see in the financial media relates to many people’s need to be right. I’m not going to speculate on the reasons each person may have for this need, but I think it’s something almost all of us do at some point.

    We all want some reassurance that we’re somehow better, because we’re right. The great traders could care less. All they care about is what the market is telling them. They’re like the legendary surfers who are so in tune with the waves that all they do is let go and ride. The great traders just let go and ride – wherever the market takes them. When it tells them to go long, they go long. When it tells them to go short, they go short. When it tells them to get out they get out. They take what it gives them and they don’t force it.

    Many of us (including myself) have spent a lot of time arguing with guys like Cramer. The truth is that it doesn’t matter. All that matters is how you personally trade the markets and how open you are to what they are telling you – based on whatever method it is you use.

    Don’t get too wrapped up in this stuff. It’s self-defeating. As Herb Brooks told his boys at the ’80 Olympics: “Play your game.”

  19. DonKei commented on Apr 4


    Yeah, rice, wheat, corn, soybeans…I’ve got to get to working that farm…

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