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You're right, but shorts don't _cause_ a stock to be low (in normal/retail circumstances). They're a bet on a stock being overvalued to begin with. - yes, shor
by popcorncowboy 6y ago
You're right, but shorts don't _cause_ a stock to be low (in normal/retail circumstances). They're a bet on a stock being overvalued to begin with.
- yes, shorting involves selling stock which nominally pushes prices lower, etc etc hat tip illegal S&D
- thebean11 6y agoI kinda disagree, shorting messes with the supply/demand curve by "creating" more shares. If person A has a share, then B borrows it to short and sells it to person C, now both A and C are effectively holding the same share. Put another way, two people have had their demands met by a single share, increasing supply.
- popcorncowboy 6y agoOnly if A sells naked shorts, which is illegal. In ordinary circumstances A and C do not and cannot hold the same share. A only holds a claim against B to return the same number of shares as were borrowed.
- thebean11 6y agoNo that's not the case. The scenario I described actually happens, and is not naked shorting. That's how GME got >100% short interest. For all you know, you could be the "A" in this situation. Many brokers will lend out your shares, but from your perspective you are just long.