2 ms·

People sell things they don’t own all the time line their house or car. When you borrow a share and sell it, you’re really renting it to find one much like some

People sell things they don’t own all the time line their house or car. When you borrow a share and sell it, you’re really renting it to find one much like someone rented it to you. It’s like subletting an apartment you’re renting from a landlord. In the end there’s a chain and if the person who lent you the share wants it back then the person you loaned it to will need to produce it for you, etc. This is why we have margin accounts (and limits to how much margin we get/can support).

varispeed 6y ago
I don't think this is the same. If you sell a house that is mortgaged you essentially pay off the mortage and therefore gain ownership and then transfer that ownership onto the buyer. The example with subletting is also wrong - the fitting analogy would be if you rented a flat and then sold it to someone.
- nemo44x 6y ago
  Just tell your broker to not loan your shares. If they weren’t bought on margin then they won’t loan them out. Standard broker agreements for margin accounts state that your shares can and will be lent. Sometimes you’ll even share in the profit from loaning them as in-demand assets for shorting often have a borrowing fee. The analogies hold though - people sell things they don’t own all the time. The important thing to understand is it is based on promises to deliver an asset/money by a certain date. Likewise people buy assets on margin all the time. This means people can buy things they don’t have money for based on a promise they will pay that money back. Credit cards, mortgages, auto loans, bonds, etc. This is how our finance system works and for whatever problems it has, the future promise concept isn’t one. Especially with the regulations and limits on it.
  - varispeed 6y ago
    So as long as there is an agreement and plausible explanation then any crime is legal? This is fishy as hell. It seems like we are going round in circles and only argument is that "hey people die all the time, so murder ain't a bad thing if the victim consented".
    - deleted 6y ago
      [deleted]

varispeed 6y ago

I don't think this is the same. If you sell a house that is mortgaged you essentially pay off the mortage and therefore gain ownership and then transfer that ownership onto the buyer. The example with subletting is also wrong - the fitting analogy would be if you rented a flat and then sold it to someone.

nemo44x 6y ago
Just tell your broker to not loan your shares. If they weren’t bought on margin then they won’t loan them out. Standard broker agreements for margin accounts state that your shares can and will be lent. Sometimes you’ll even share in the profit from loaning them as in-demand assets for shorting often have a borrowing fee. The analogies hold though - people sell things they don’t own all the time. The important thing to understand is it is based on promises to deliver an asset/money by a certain date. Likewise people buy assets on margin all the time. This means people can buy things they don’t have money for based on a promise they will pay that money back. Credit cards, mortgages, auto loans, bonds, etc. This is how our finance system works and for whatever problems it has, the future promise concept isn’t one. Especially with the regulations and limits on it.
- varispeed 6y ago
  So as long as there is an agreement and plausible explanation then any crime is legal? This is fishy as hell. It seems like we are going round in circles and only argument is that "hey people die all the time, so murder ain't a bad thing if the victim consented".
  - deleted 6y ago
    [deleted]