To put this completely into my (as I understand it) understanding - you pay to borrow someone's shares, and then basically flog them at the current price, with a promise to buy shares back and give back to the original owner you borrowed from in the instance of:RegisterMe wrote: ↑Mon, 8. Feb 21, 14:35So, at least imho, shorts have a real role to play. They are also not "free". To take a short position you need to pay to borrow the stock
a) You remove your "short position"
b) They want to sell their stock?
The reality sounds like you can use leveraging to effectively borrow more than you can afford? But that's not really relevant to my thoughts anyway!
My issue with shorting is simply this. You don't own the shares in the first place, you've never invested in the company. Price correction and whatnot is not something I consider in this - just purely that you've not invested.
So you shouldn't have access to shares. Want an investment in them? Buy shares. The idea of "pay to borrow" is a wrong un for me.
If you won't buy them as you think they're overprice - well guess what... don't buy them then. Doesn't mean borrow to bet against.
That's literally my dislike. You may open a position that's exposed to huge losses if wrong, so what. The entire shorting feels like someone sat there going "I KNEW they'd drop in value. Now if only I could have borrowed someone's shares to sell at the high point as I knew they'd tank, and buy them back at the low point to make money... how can we do this?". Seriously, it's not necessary.
There may well be great financial health and justifications, fine. But to me, it's just an opportunity to make more money rather than investing in your positive beliefs. I just have a different outlook to some I guess.