Talk:2094: Short Selling

Explain xkcd: It's 'cause you're dumb.
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It's like he's doing that on purpose to make it extra difficult for this site to explain his comics. :D I at least understood nothing. Fabian42 (talk) 16:19, 4 January 2019 (UTC)

@Fabian42, Ha! Yes, I'm in the same boat with you, It's almost like he follows this formula: 1. Pick a topic that very few understand. 2. Make an analogy that is more complicated than a straightforward explanation. 3. Profit.
I've been reading a page on short selling, it's like they're speaking a foreign language. 16:42, 4 January 2019 (UTC) sam
It makes sense from what I remember from economics in high school: you buy stocks in advance for significantly above asking price hoping they gain more value before the deal happens, so let's say 1 share of company X is worth 20$ right now. Now I can offer you a contract that I'll buy this share from you for 50$, but on the condition that the deal happens in a week. If the value of the company stays the same, I make a loss; but if the value rises within that week and one share is suddenly worth, let's say 2000$, I make an immense profit. (divide each value I gave by ten and you have the bean/witch/child analogy from the comic) It's basically gambling on the hope that the value of stock rises. -- 17:24, 4 January 2019 (UTC)
How are stock markets even still legal? This is insane! Fabian42 (talk) 17:42, 4 January 2019 (UTC)
It is not that hard to understand. Imagine you own 100 apple-shares and do not plan to sell them for the near future. You lend me these 100-shares for 2 weeks. I sell the 100 shares immediately. Now I have 2 weeks to re-buy them. If I’m lucky the price for these 100 shares will decrease somewhen during this 2 weeks. Imaging that I sold the shares for 200$ each, and could re-buy them for 170$: Then I made 30*100$=3000$. Of course you will get a fee for the borrowing. The 3000$-fee are my profit.
The risk here is of course that the shares could increase in price during the 2 weeks – then I would be forced to rebuy them for more that I got AND have to pay you the fee. That’s the reason shorts are more dangerous then longs. --DaB. (talk) 17:36, 4 January 2019 (UTC)
You sell something that you borrowed? Why would that be allowed? It's not yours! And what happens if you can't buy it back? Fabian42 (talk) 17:42, 4 January 2019 (UTC)