selling short

That's called "short" buying/selling.

and your point is?

I was also wondering what your point is.

my point is that we seem to have lots of people coming up with opinions about what should be done about "selling short" including enacting legislation from people who have no idea what they are ta; not unlike talkng about"greedy speculators" or the commodities markets etc. etc etc. let alone "socialism"

The term, Short Selling seems to be the most widely used, but they both have the same explanation.

I thought Dys' explanation was clear, but I wanted to get a link, so here is what I thought was easy to understand. I also understand why it cannot be regulated: individuals are spending their money on a product. That isn't illegal even when large corporations do it in a big way.

Here is a link with one paragraph that provides a clear example:

Selling Short Stock

http://addtrader.wordpress.com/2008/01/12/how-to-explain-short-sell

ing-to-a-non-trader-like-your-mother/


A share of stock is standardized, just like a book, meaning each

share of IBM is the same, just like every copy of Harry Potter and the

Deathly Hallows, on the shelf at the local bookstore is the same. So

let’s say your best friend just bought a brand new copy of Harry

Potter, and the moment he brought it home you asked him to borrow

it. Now that you have borrowed it from him, you owe him back one

copy of Harry Potter. So you take the copy he loaned you, and you

sell it. Maybe you sell it on Ebay, maybe at a garage sale, maybe to

an individual, it doesn’t really matter. You get $25.00 for the book

when you sell it. Now you still owe your friend one copy of Harry

Potter, so you order a copy on-line, at a discount book wholesaler.

That copy only costs you $19.95. The book arrives, and you return it

to your friend, and keep the difference between what you sold it for

($25.00), and what you bought it back for ($19.95). You have thus

made money by selling something you did not own, and then buying it

back (and replacing it) for less that you sold it for.

Short sales have been temporarily banned, by the way.

in these modern times, isn't it called selling vertically challenged

I think "Naked" short selling was the real problem. The only reason they banned short selling for the moment was to try to improve stability within the market until things settle down. Once stability returns they will probably re-implement short selling.

Naked Short selling on the other hand is (and has always been) illegal. Amazingly however, the SEC decided to "look the other way" when certain major players started doing the naked sell. Three out of those five major players are now bankrupt.