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Because short sellers increase liquidity, and help the market determine an accurate price for the company. Also short selling is far more risky than taking the
by rongenre 8y ago
Because short sellers increase liquidity, and help the market determine an accurate price for the company.
Also short selling is far more risky than taking the long side. On the long side, your downside is the money you invested (if the price goes to zero). On the short side, your downside is infinite (if the price keeps going up).
- tuesdayrain 8y agoShorters also apply downward pressure that might not exist naturally, since they're selling borrowed stock. AFAIK they could potentially short more stock than is even issued by the company. It's understandable why some companies would be irritated by people doing that.
- malshe 8y agoYou are talking about naked short selling. I think except by a few vocal opponents (e.g., Overstock CEO) generally naked short selling is not considered a major concern in the market as Long as it is not abusive.