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The demand for shares is the demand for its discounted future cash flows. No rational investor buys for any other reason.

• dhruvdh 6y ago
  Okay, for anyone who agrees with you on this the price of shares are predominantly decided by irrational investors. And in a market where price of shares are predominantly decided by irrational investors, none of your purported benefits apply.
  • dcolkitt 6y ago
    That's the point. Short selling acts as a tax on irrational investors. That's why short selling is linked to a reduction in speculative[1], corporate fraud[2], and price inefficiency[3]. It makes the market more rational, by driving irrational investors out of the market. [1]https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6261.2006.00868.x https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6261.... [2]https://onlinelibrary.wiley.com/doi/abs/10.1111/jofi.12369 https://onlinelibrary.wiley.com/doi/abs/10.1111/jofi.12369 [3]https://academic.oup.com/rfs/article-abstract/26/2/287/1581906 https://academic.oup.com/rfs/article-abstract/26/2/287/15819...
    • dhruvdh 6y ago
      Again, you are living in a textbook. See the real-world effects of short selling on TSLA, and all the irrational investors that made bank on the same. If irrational investors are being driven out why is there an evident trend of increasingly irrational stock prices over time?