The conspiracy theorists have been arguing for month that aggressive short-selling and illegal naked short selling played a significant role in the financial collapse.

Bad news: The data just doesn't back that up.

Judge Donald S. Goldman of the Superior Court of New Jersey dismissed Biovail's (NYSE: BVF) lawsuit against SAC Capital Advisors last week, saying that he lacked jurisdiction.

The lawsuit, originally filed in 2006, accuses SAC of colluding with analysts and other firms to produce misleading research designed to drive down the company's share price -- allowing the firm to profit from its large short position in the company's stock

Goldman wrote that he had not evaluated the merit of Biovail's claims, but did say that the company had failed to show that it was entitled to damages, even if its allegations were true. Another judge who had dismissed another Biovail-related lawsuit said that the company's history of securities fraud and run-ins with regulators gave the case a "tainted origin".

Investor and trader Mishko Janusevich, he of decent-sized net worth fame, had a mantra that he used to repeat while outlining the top, new stock shorts that appeared that day, as determined by technical indicators.

He would stand next to the overhead projected stock chart at the front of the trading room, point to the stock chart and recite, "You see this stock? You see that it's dropped $8 in past two days? You think it can't drop any more? SELL THAT STOCK, it's dropping more!!"

The Wall Street Journal headline reports (subscription required) that the SEC is "deluged" with support for the return of the uptick rule. Investors who've watched their portfolios hemorrhage value are quick to blame those mean, nasty hedge fund short seller-types.

I'm going to write something here that probably flies in the face of what most people are thinking but here it is: Who the heck cares what most people think about the uptick rule? Seriously. Of course most investors are going to oppose anything that makes it easier for stock prices to fall but the role of the SEC is to maintain a fair and orderly stock market -- not to appease the short-term oriented desires of people who want to look at their portfolio statements and see black.

Options and trading specialist Bernie Schaeffer selects stocks based on a combination of fundamental, technical and sentiment-based metrics.

His research leads to long trading positions for his Schaeffer's Master Portfolio and short trading plays for his Schaeffer's Short Selling services.

Here's a long at four of his latest trading ideas -- long positions in Netflix (NASDAQ: NFLX) and VMware (NYSE: VMW) as well as short position in Exxon Mobil (NYSE: XOM) and Apple (NASDAQ: AAPL).

Newly-installed SEC Chairman told a public round-table meeting that she has "made it a priority to evaluate the issue of short-selling regulation, and ensure that any future policies in this area are the result of a deliberate and thoughtful process."

The SEC has floated a number of potential proposals for dealing with the short-selling "problem," including making it illegal to short sell stocks that are down 10% or more. One popular "solution" is to bring back the recently revoked uptick rule that required short sellers to execute trades only on an uptick -- if the last trade was at $20.00, you could only sell short at $20.01 or higher.

The short sellers are back in force.

• Short selling in Citigroup (NYSE C) is up six fold since February 27
• Short sales for Bank of America Corp (NYSE BAC), Met Life (NYSE MET) and Amercian Express Co (NYSE AXP) are up 40%
• Short sales for 18 banks are twice as high on April 15 as they were at their peak last year in July

You are probably asking why is this happening? Overall, investors are seeing that the process of "stress tests" is not being managed well. When there is uncertainty, investors prefer the short side to protect their other long positions.

In a distinctly depressing sign of the times, BJ's Wholesale Club, Inc. (NYSE: BJ) announced today that it will begin accepting food stamps as payment at all 180 of its retail locations. Food-stamp payments will be processed through the Electronic Benefit Transfer (EBT) system.

"BJ's recognizes the diverse financial status and changing needs of its members," commented president and CEO Laura Sen in a statement. "We are proud to help members stretch their food budgets by offering savings on a large selection of fresh fruits, vegetables, meats and baked goods, along with name-brand, non-perishable staples."

There was a strong outcry last year: "Stop the short selling. It's killing the market." Short sellers were blatantly selling short and then "failing to deliver the stock."

So what exactly was happening? First of all, in order to sell short (sell something you don't have) you must first borrow it from someone else. Usually there are willing lenders at large brokerage houses. What you are trying to do is to sell the stock first and replace it a lower price later on (that is if the market goes your way -- down).

Last year we saw traders selling short without first borrowing the stock. Then, when the buy trade to replace it was executed, there was no stock to deliver. Remember, they were supposed to borrow it first. This is called a "fail to deliver" trade. Former SEC commissioner Roel Campos wrote a letter and posted it on the SEC's website saying: "these companies are instead targets of illegal and manipulative trading with intentional failures to deliver used by traders to extract profits as the share price plummets."

The Wall Street Journal reports (subscription required) that "The Securities and Exchange Commission received 5,000 complaints over a year and a half about an aggressive form of short selling that critics call market manipulation, but it didn't bring any enforcement cases, according to a report by the agency's inspector general."

While Ben Bernanke's announcement that the Fed was buying Treasuries and sucking up bad mortgages was the cosmetic reason for financials to soar, an equally compelling reason may have been the massive but little-noted short squeeze that the announcement, combined with large government purchases of stakes in these companies, engendered.

The SEC is expected to propose within the next month that the uptick rule be restored in the stock market. The uptick rule required that short sellers only short stocks on an uptick and was designed to prevent bear raiders from driving stocks down with aggressive shorting.

The S&P 500 is down 53% since the rule was scrapped in July of 2007 and Barney Frank and Chris Dodd are among the proponents of bringing it back.

With conspiracy theorists and corporate crybabies up in arms about short sellers and their exhibitionist twins -- naked short sellers -- manipulating markets and causing the collapse of companies like Bear Stearns, the man in charge of regulating the British market, says that's just a bunch of poppycock.

Adair Turner, the chairman of the Financial Services Authority, said that the FSA's lifting of the ban on short-selling last Friday had not played a "significant" part in the meltdown that has occurred in the interim.

"So far, we have not seen stuff (that) suggests that short-selling and in particular abusive short-selling has a significant role in what has occurred, he told the BBC.

Let's recap: Last September short-selling was banned and then the ban was lifted and the market absolutely crumbled within a week. Why? Because people were concerned that the financial stocks had no value because they would require nationalization to avoid outright failure.

Short-sellers are a convenient scapegoat for the current mess but so far there's very little to indicate that it has any relevance at all.

For 26 years, at the start of each year, I've conducted an annual survey of newsletter advisors, asking for their favorite investment for the coming year. Until 2 or 3 years ago, their responses were almost always individual stocks and an occasional mutual fund.

Increasingly in recent years, many advisors have found their favorite positions to be exchange traded funds, whereby they can invest in a sector, region, or strategy without the inherent risk of an individual company. Indeed, in this year survey of 75 advisors, fully 1 out of 5 advisors chose ETFs.

ETFs were a popular choice for those seeking global exposure. Mark Salzinger, editor of The Investor's ETF Report, selects the S&P China SPDR (NYSE: GXC) as his favored play. (Read the full article here.)

Nick Vardy sees opportunity in China, but also sees potential in a broader range of emerging global markets. The editor of Global Stock Investor looks to the iShares MSCI Emerging Markets (ASE: EEM) as his top idea for 2009. (Read the full article here.)

Carl Delfeld of Chartwell Advisors also wants to own a basket of emerging markets stocks, but only small caps. His pick is the WisdomTree Emerging Market Small Cap (NYSE: DGS). (Read the full article here.)

Jim Lowell takes a similar view -- chosing global small caps -- but adds a further restriction. His recommended ETF limits its holdings to dividend paying stocks. Hence, the top pick in his Marketwatch ETF Trader is the WisdomTree International Small Cap Dividend (NYSE: DLS). (Read the full article here.)

ETFs an also be used to play a specific sector, such as consumer stocks. Leonard Goodall sees upside in companies making the "basics" such as soda, toothpaste and soap. In his No-Load Fund Investor, his top way to play this trend is the Consumer Staples ETF (NYSE: XLP). (Read the full article here.)

In addition to using ETFs to invest in a region, country or sector, these vehicles can also be used to invest in a certain strategy. For example, Tom Bishop, editor of BI Research, chooses the PowerShares Value Line Industry Rotation ETF (NYSE: PYH), which rotates its holdings to only include stocks that earn Value Line's top investment rating. (Read the full article here.)

Doug Fabian, editor of Successful Investing, looks to PowerShares DB Crude (NYSE: DXO), an exchange-traded note. While this leveraged position goes up twice as much as the underlying index when it rises, it also goes down twice as much when the index declines. (Read the full article here.)

Paul Tracy, editor of StreetAuthority Market Advisor takes a similar approach, but rather than speculate on the price of oil and gas, he looks to ProShares Ultra Oil & Gas (NYSE: DIG), which invests in a basket of stocks operating within these sectors. (Read the full article here.)

The most popular choice in this year's survey was ETFs investing in gold. Both Vivian Lewis, editor of Global Investing, recommends the SPDR Gold Trust (NYSE: GLD); it's price reflects 1/10th of an ounce of gold. (Read the full article here.)

Mary Anne Aden, editor of The Aden Forecast, also selects the SPDR Gold Trust (NYSE: GLD) as her top investment ideas for the coming year. (Read the full article here.)

Mark Leibovit, market timer and editor of VRTrader, holds a long-term bullish view on gold and opts for upside leverage. His top pick is the PowerShares DB Gold Double Long (NYSE: DGP). (Read the full article here.)

Pamela Aden, co-editor for The Aden Forecast, also sees upside potential in gold but prefers to invest in the companies that mine for the precious metal. Her top pick is the Market Vectors Gold Miners (NYSE: GDX). (Read the full article here.)

For greater leverage (and higher risk), Steve Rawls, editor of Tipping Point Stocks, suggests the ProShares Ultra Gold (NYSE: UGL), which moves twice the rate of the underlying London gold price. (Read the full article here.)

Mike Larson, editor of Money & Markets, sees downside risk in financial stocks. But rather than try and select which stock might fall, he opts for a basket of financial players with the ProShares Trust Short Financials (NYSE: SEF). As an "inverse" fund, this moves in the opposite direction of the underlying index. (Read the full article here.)

And for even higher risk and volatility, Michael Shulman, editor of ChangeWave Shorts, looks to the ProShares UltraShort Financials (NYSE: SKF), an inverse double fund. Not only does it move in the opposite direction of financial stocks, but it moves twice as much. (Read the full article here.)

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

Given the total nightmare that the securities markets have become over the past few years, you would think that the SEC chairman would be a little bit ashamed of his tenure. At the very least, he wouldn't have the cajones to go on the record as being proud of his accomplishments, would he?

If his name is Chris Cox, yes he would. In his first interview responding to the well-deserved criticism that has been tossed at him, Cox said that "What we have done in this current turmoil is stay calm, which has been our greatest contribution -- not being impulsive, not changing the rules willy-nilly, but going through a very professional and orderly process that takes into account unintended consequences and gives ample notice to market participants."

Holy crap. This is the equivalent of Nero saying that he takes considerable pride in his measured, prudent response to the burning of Rome: "At least I didn't panic!"

He referred to the Madoff affair as a "big asterisk" on an otherwise good record. Right: the largest Ponzi scheme in history was an asterisk. So other than that Mrs. Lincoln, how was the show? Notably, Cox did admit that the ban on short selling of financial stocks was a mistake. Of course, we already knew that, and most intelligent commentators said all along that the SEC was barking up the wrong tree in going after short sellers.

By any objective measure, Chris Cox's tenure as SEC chairman was a pathetic failure. But watching him to try to defend it is sort of fun.