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The mechanics are that you loan shares, sell them at the price you think is too high, buy them at the lower price, then hand those cheaper shares back. The arg
by jacques_chester 9y ago
The mechanics are that you loan shares, sell them at the price you think is too high, buy them at the lower price, then hand those cheaper shares back.
The argument for doing so is that humans err in favour of optimism -- ie, that prices will rise. But you can make money on the market moving either way.
Looking on it as a total outsider with limited knowledge, it seems like a fascinating niche in the financial world. But I imagine it is also even more stressful than betting on the price rise, because you're more often going to be outside the pack.
- rootusrootus 9y agoIt is a lot more stressful because if you bet on the rise, the most you can lose is what you paid for the stock. Your loss potential with short selling is unbounded.
- otherme32 9y agoKostolany became rich shorting. He wrote the worst of being a short-seller is that you are earning a lot of money while all your friends are losing it. You have to keep a low profile because everyone looks at you as the cause of their loses.