Many people buy into the stock market thinking the only option is to buy into companies and hope fortune is good all around, but there has to be someone playing the house, and that is the person short selling. To short sell means to sell something that has been borrowed from a third party, and then come back later to buy back the asset at the new (Hopefully Lower) price. So in other words, its like selling something now, and then buying it later, the opposite of buying something now and selling it later, which is the normal way to buy stocks.
The reason somebody would short sale is because they think that the price of a stock is going to drop, cashing out on the current value to prevent loss of money. After the value of the stock drops, the person who previously sold the asset at a higher price will buy it back cheaper than he/she sold it, hoping the value will rise again.
No comments:
Post a Comment