I understand that it means betting against a company’s future prosperity in value.
But why is that a thing?
How does it actually work?
Who are you buying from/selling to, when you practice this?
Sounds more similar to gambling than to constructive investment.
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In: 9
To short a stock, you borrow shares from other investors at your brokerage sort of like how a car loan from your bank is funded from deposits of other bank customers.
You then sell the borrowed shares, pocketing the proceeds. You owe the brokerage a return of the shares, and you’re hoping that down the road the stock price will fall and you can buy shares to return at a lower price. If you shorted at $100 and stock falls to $75, you could then return the shares and make $25 per share in net profit.
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