I understand what the actual process of doing so is, but for example I’ve seen people who work on wall street try to reassure us that it’s a normal and healthy part of wall street. I don’t understand how it’s allowed, or why any company would allow it to happen to their shares?
In: Economics
Companies have no control of their shares once they’re in the hands of the public. Shorting shares is a transaction among investors.
And the ability to short allows investors to profit from successfully guessing a company’s shares will fall in price rather than only having a means to bet on a company doing well. And it can help create liquidity in the market of that stock by generating shares for sale that otherwise might not be sold.
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