Short Selling Paper

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In economics, short selling is the practice of selling stocks where the stocks have been loaned out from a third party (usually a brokerage firm) with the purpose of purchasing matching securities at a later date to return them to the brokerage. The procedure completes the economic benefit expected from future supposed falling prices of the securities, and that returns the same amount of borrowed securities, but not the same monetary value. If instead the values rise, investors suffer a loss. This is the opposite of long term investing where value will rise in the long term.
In order to short a stock, you must borrow stocks from your stockbroker. While this may sound like a problematic process, it actually takes a matter of seconds. The reason is that when you sign a margin agreement, you are giving your broker the right to hypothecate stock, which is just a fancy term for lending. So for example, if you have shares of Microsoft in your margin account, it's possible that the broker may loan those shares to another trader to short. But don't be worried, your account will always show ...

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