What’s the purpose that benefits the whole of the economy? I don’t understand it’s purpose other than to bet on a losing stock. Is it purely for hoping a business will fail? Where is the benefit outside of the individual shorting? The idea of shorting a stock seems unmoral and unethical. Basically why is shorting even allowed to be a thing?
In: Economics
It’s related to the concept of creative destruction.
The idea is that if a business is destined to fail, it is better that it fail quickly and free up employees and capital for more productive ventures.
Think of short sellers like vultures. It isn’t pleasant to watch, but without vultures and other scavengers, the natural would be littered with rotting carcasses.
There are abusive/predatory short sellers who spread false rumors about otherwise healthy companies to drive the price down artificially. This is illegal, but most short selling is ethical and helps the market be more efficient.
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