I just cannot, for the life of me, understand how you make a profit by it.
In: Economics
You give your friend 10 usd to borrow his bike and you agree to give it back in a month.
You then show “your” new bike to your friends and one of them offers to buy it for 100 usd. You know black Friday is coming before you need to return the bike and you know you can get it cheaper there so you sell it. Black Friday comes around and you buy the bike for 80 dollars and then return it to your friend. Congratulations, you made 10 dollars shorting.
Aside from consent issues in the example, it’s the same for stocks. You borrow someone else’s stock, you sell those stocks and hope they will be valued less when it’s time to return them because you need to buy same number of stocks back.
[This answer is from here.](https://www.reddit.com/r/explainlikeimfive/comments/17efm0e/eli5_the_mechanics_and_concept_of_shorting_stocks/)
Latest Answers