Well, allow me to provide some information that may in part sway your view on this.

Firstly as a reasonable newcomer to the Australian shores, I am agog at the practive of Trading Halts on the ASX.
In other countries (and I site the U.K from experience), there is no such thing. Typically any material information that would affect a stock price is announced when the market is closed, and then the market is allowed to trade as normal during normal market trading hours. It would seem that the recent announcement and trading halt from the NAB to facilitate a $3 billion rights issue in a matter of hours is a case in point. It surprised me that the bank managed to find buyers for a $3 billion rights issue in such as short space of time. One can only conclude (by suspicion and inference) that the buyers were fore-warned. The old boys network of pulling in favours must have been working very hard the weekend before.

But to add to Walters's question and any debate the question may bring up, I site the instance of CEO to the NAB a Mr Ahmed Fahour who expressed earlier in the year (around September I believe) his total confidence in his employers and the company he is gainfully employed working for and as such invested heavily in the NAB's shares. He stated at the time that this was an ongoing exercise of investing for the long term into the company he had great faith in. He brought a major holding in the region of $24 a share.

Now roll on to the previous week. A trading halt on the Monday with the announcement that they were undertaking a $2 Billion right issue at a $20 discounted price. So successful were the back room weekend deals that by 2.30 pm on that Monday, they had actuall oversubscribed this to $3 billion (lucky them).

Between the Banks stock going ex-divi the previous week to this, and the Friday before the right issue, Mr Fahour sold $3 million in stock.

Now I am not a great economist but as a shareholder in the NAB myself had I been fore-armed with the knowledge that the future earnings were to be diluted by $3 billion additional dollars, I would have expected the share price to be devalued to reflect the larger distribution of the dividends. Low and behold come the Tuesday, the stock is now trading at nearly a $5 discount. And this continues into the week.

According to the Chairman of the NAB and the board, Mr Fahour was not involved in the rights issue, and he was required to maintain an arms length from the process because he had discussed his wishes to sell shares to meet a pending ATO tax bill.

Now this is a man who is CEO of a first world financial institution, and yet he ventures his tax liabilities into volatile shares. Not very wise for a man you would expect to have a better business brain that that. I know for one that my tax liabilities are safely stowed so that I can meet the bill when it is due. I may get a small income from it from the Bank, but I certainly would not invest it in shares. I suspect neither would Mr Fahour really, and I prefer to think the following actually took place.

Mr Fahour (reasonably like myself) expected the share price to dive when he heard of the share placement plans. He decided he didn't much like the idea of losing a large percentage of his stock holdings value. He asked to be removed from the process so as not to be seen to be acting on the knowledge. He then (here is the accusation, this is unfounded but based on a fair measure of circumstantial evidence, at least suspicion) acted in the ensuing days to divest himself of $3 million in stock. He needed an excuse to undertake this at such a sensitive time, and related this to a pending ATO bill to appear to give rightful justification.

So Walter, since the ASX are not investigating Mr Fahours conduct and the involvement of the NAB chairman and board, your question is more apt than you perhaps appreciated.

I believe that Mr Fahour has saved himself in the region of $500K by his actions, where as I and every other NAB share holder have seen my stock holding devalue to %20 less than they were when Mr Fahour was selling.

One has to ask, if Mr Fahour is such a pillar of the financial community why would he risk his reputation by acting in this way. Even if there is truly no foundation to any Insider Trading claims, it is seriously unfortunate timing and perhaps he should have been discreet?
Perhaps being passed over for chairman for a younger man has made him re-evaluate his position at the bank and that this is his first move towards the window and the inevitable golden parachute for the jump out. We will have to watch. I suspect bringing the conduct of the banks share trading practices under scrutiny might be an indication that this is either the boards, or his intention.

Short selling, just smacks of margin trading, and which like all speculation is doomed to fail. Good Grief! never gamble with money you can't afford to LOOSE.

"Naked short selling" is just fancy lawyer talk for the 'big boys are stealing, again'... In fact, those short sellers ought to have to drink all that bloody awful tea and have crumpets with the Queen while their at it.

There are some aspects of dailyreckoning that i really respect, especialy that the long term creation of wealth is achieved by spending less than you earn. Sure there maybe better optimal strategies that excelerate the earnings power of savings, but at the end of the day if you spend less than you earn you future has to be brigher.

This is basical investing 101, and a lesson, many of the smarter players out there forget.

As for me, i will take the simplistic approach.
I will buy when others are scared,
I will buy an asset class when it produces a decent cash (dividend) return on investment.
I will not engage in finacial engineering,
I will only use borrowings, when the cost of debt is significantly less than the cash return on investment (ie im not interested in capital gain adjustments, i will leave this to 'smarter people'. In addition i wil fix those borrowings for as long as possible. Once again im not interested in flipping the asset, its the cash earnings that i am interested in.

Until next time,
Your simplistic investor.