Trant said...pweedas said...
Oh, I see. You mean short selling. i.e selling shares now that you don't own because you know you can buy them next week for cheaper.
That's not how short selling is supposed to work.
Proper practice is to 'borrow' some shares for a fee with the intention of giving them back after a short period of time. In the meantime, you would sell those shares and then buy them back.
e.g.
Bob lends me 100 shares in Facebook in return for $100
I sell the shares to Jill at $38 each
1 week later I buy back 100 shares from Julian at $32 for a profit of $600
I give the shares back to Bob
I've just made $500.
I'd say now is a very good time to go short on our fat companies. When the markets are in turmoil - great time to cut down all the tall poppies and make a few dollars at their expense. I haven't done it myself - haven't really grasped the concept. I've always gone long. Still learning, I guess.
Capitalism is a two edged sword - a wonderful thing.
