Think about this example. You trade in bricks. Someone wants to buy some bricks. You do not have the exact bricks required in stock but you can get some very quickly. You tell the purchaser that he will have his bricks at the end of the week and you agree a price.
On Thursday, the price of the bricks to you falls so you buy the bricks at a reduced price but still qualify for the agreed price from your customer.
This is the basis of short selling and shows how you can make money even if the shares drop in price.
The only way to cripple this process is, as a believer in the value of bricks, to ensure that the price of bricks doesn't fall, by buying as many bricks as possible to create a shortage; such that those promising them cannot get some very quickly anymore. Then, those who made promises must (are forced to) buy your bricks at whatever price you (and all other brick HODLers) would like to charge - because they HAVE to have them.
I must be dumb because I can not conceptualize how something not in one’s possession could be sold or lent?
Think about this example. You trade in bricks. Someone wants to buy some bricks. You do not have the exact bricks required in stock but you can get some very quickly. You tell the purchaser that he will have his bricks at the end of the week and you agree a price.
On Thursday, the price of the bricks to you falls so you buy the bricks at a reduced price but still qualify for the agreed price from your customer.
This is the basis of short selling and shows how you can make money even if the shares drop in price.
The only way to cripple this process is, as a believer in the value of bricks, to ensure that the price of bricks doesn't fall, by buying as many bricks as possible to create a shortage; such that those promising them cannot get some very quickly anymore. Then, those who made promises must (are forced to) buy your bricks at whatever price you (and all other brick HODLers) would like to charge - because they HAVE to have them.