so in theory, I borrow my buddy's Playstation and sell it for $100. Then I buy a Playstation for $80, pocket $19 and give my friend the Playstation plus $1 for his trouble?
@Donzq8 So, sorry to badger you for answers, but does the act of borrowing (in this case) mean the lender expects to have the shares returned after the lending period, but instead the trader sells them for his own profit (illegally)?
@HarunDanyal he expects them to be returned yes, but he hedge against this by buying new shares. plus, the fee hes getting from the shares he lent. The only thing here is that it isnt illegal. They plan on making it illegal, but just not yet.
To clarify the legal situation too: naked short selling (when you don't borrow the shares, but sell something you don't yet have) is illegal most of the time. Basic short selling (what they described) is normally fine, but in a bad economy can cause a feedback loop turning a bad economy into a collapsed economy. This is why basic shorting has been suspended. Naked shorting is basically fraud, there is no "banned for 15 days", it's a crime whenever you do it.
@annoloki That's not true. The worry of naked short selling is not "fraud", it's over leveraging or over extended the credit. Short selling is actually a stabilizer for a stock market because investors can interchange and hedge positions. It can also increase liquidity and up-to-date market value. The markets that forbade short position are usually those with slower recovery and lower trade volume.
@mercedescl I agree with the stabilizing position that short selling adds to hedging, but the problem is when insider trading gets into it, and add to that not a very transparent stock exchange, with a capital market authority that has its head underground, you've got yourself a problem. Plus when you with derivatives, its a pain the ass and can OVER leverage your position if you're shorting gimmick doesn't go through
@Donzq8 Insider trading is insider trading; short selling is short selling; derivatives are derivatives. 1 is cheating, 2 is just "buy in the near future", 3 are products that are sold to professional investors. All three are different topics of discussion. Don't mix them all together and claim that short selling is "dangerous".
so you borrow 100$ worth of shares, the price of the shares then go down. You buy back your borrowed shares for 80$, due to the falling stock price. Finally, you make a 20$ profit because you sold borrowed shares to yourself?
This is incorrect. Naked short selling is when you sell WITHOUT first borrowing the share, in the hope that you will simply be able to purchase it on the market at a later date for a lower price.
hold up, i need help cos i dont understand summat: the geezer on the right takes his societe generale stock back which he rented out but now his stock aint worth 100$ bucks but instead only 80 after the naked short sell done by the geezer on the left.
wouldn't that mean that the one on the right lost 20$ on each share and thus made a loss in his portfolio, nevermind the fee he charged the borrower??
@dontliethetruth No because the idea is that the stock would be going down in value anyway, so at least this way the lender has made a fee from it. Short selling on its own (described here) isn't really so dangerous, what's dangerous is naked short selling, which is short selling WITHOUT first borrowing the share, in the pure hope that you can later buy it on the open market. This disrupts price discovery as you separate supply/demand which allows for the crashing of a business.
I need help with this to. But I think because you sold 100$ of borrowed shares to yourself for 80$, when the stock price fell. You as an individual, was both the buyer and the seller. Therefore, you made 20$ has the seller.
@Rsd79 You sell the share at today's price to anyone who wants it at that price. You buy a share back at tomorrow's price from whomever is selling it at that price. All shares in a business are equivalent, you don't need to be buying it back from whomever it was you sold it to. It all happens auction style. You're betting that people won't be willing to pay as much tomorrow, so sellers will have to sell cheaper.
Thanks for the explanation. You say that I am betting that people won't pay as much tomorrow. But the guy in the video says that it is a self-fulfilling prophecy that the share price will go down tomorrow. I am gonna re-watch the video.
@Rsd79 He's mistaken... he's describing normal short selling, but talking about the problem of naked short selling. They have misunderstood what naked short selling is, and so are describing it incorrectly.
@Rsd79 You rented the shares of someone else at a cost of 1% of whatever money you make to the leaser. You sold them at $100.00/share to whomever would buy, then you waited for the share price to reduce to $80.00 and bought them back and made a $19.00 profit, you must give the leaser what he is owed.
@Rsd79 With naked short selling, you don't first aquire a loan of the shares to sell. This allows you to sell something you don't even have, and take advantage of the fact that you have a few days before you have to transfer the asset to hide that fact. This allows you to increase supply, without adding any extra demand (no new shares are needed to sell shares that don't exist) which causes a drop in price. Normal short selling creates a demand for a share, so doesn't have the same problem.
Basically, you are selling $100 worth of borrowed shares then betting the price will go down. Tomorrow, the price of the shares are 80$. You buy them at the 80$ price. Therefore, after all the transactions in my comment. You bought a share that was previously worth 100$ for 80$. However, to realize this 20$ profit, would you not need the stock price to go back to 100$?
Short selling is much different than naked short selling. Short selling is just betting a stock will go down. Naked short selling is what JPM is doing with silver. They are shorting silver with money they don't even have. They are using bail out money.
This former CNN prick on the left is so used to making jokes and being "affable" instead of getting into the real "meat" of the segment, that he can't resist saying, "...naked short-seller. Would it be better if I'm clothed? But that's another thing. Hahaha". I can't believe they hired him at AJE.
A "naked short seller" doesn't even have to borrow the shares to sell them, he sells them and buys the shares back before the close so then he has something to give the the original buyer. Thats why its called "naked" because he originally has nothing to sell. A normal short seller is what he is describing.
@TomMarAlem1987 It also teaches you how to beat your wife. Which I think any reasonable person can acknowledge is an important and reasonable thing to do at certain times. The prophet speaks through you. Salem brother.
@mispistoleros /watch?v=wfPSN_92v2w It is not in the qu'ran but its interpreters and followers have read and understood the hadith and learned the way of controlling thy wives. Salem!
@jonahfox, something tells me you're out of touch, only here to stir up shit. now, can you provide one arab name associated with the 2008 wailing wall street meltdown?
B.oycott
D.ivest
S.anction
Israel, the only terrorist, nuclear rogue, apartheid MYTHOCRACY in the ME..
@jonahfox, CHILD SEX INDICTMENTS PLAGUE ORTHODOX JUDAISM
By Rev. Ted Pike
13 Jun 2011
New York journalist and attorney Michael Lesher says, “A certain amount of sexual deviance is going to be found in any society. What is really shocking is the extent of license that’s been extended to these people to victimize children and if you are a pedophile, the Orthodox Jewish community is one of the best places you can be…” (In The Wall of Silence, a Canadian TV documentary about haredi sexual abuse
@mispistoleros Oh Brother! You must be thinking of Catholicism brother. Oh! This is anecdotal. You clearly hate Jews. This is more than just anti-zionism. See Hadith Volume 4, Book 52, Number 176. Salem.
OK If he bought it for $100 and sold it for a $100 at the market. But then he bought it at $80. Wouldn't it be a loss of $20 instead of profit?
Please Help
101simar 5 months ago
@101simar
He never bought anything, he borrowed them for a $1. He sold at $100 then bought 48 hours later for $80. $19 profit.
Simple.
RyzieG 4 months ago
@RyzieG
so in theory, I borrow my buddy's Playstation and sell it for $100. Then I buy a Playstation for $80, pocket $19 and give my friend the Playstation plus $1 for his trouble?
architrader 3 months ago
The only thing I don't understand is why anyone would let some one borrow a stock for 1% of its value...
HarunDanyal 6 months ago
@HarunDanyal because if the stock goes up, they will make up for the profit. But most often than not, its used for hedging both ways.
Donzq8 6 months ago
@Donzq8 So, sorry to badger you for answers, but does the act of borrowing (in this case) mean the lender expects to have the shares returned after the lending period, but instead the trader sells them for his own profit (illegally)?
HarunDanyal 6 months ago
@HarunDanyal he expects them to be returned yes, but he hedge against this by buying new shares. plus, the fee hes getting from the shares he lent. The only thing here is that it isnt illegal. They plan on making it illegal, but just not yet.
Donzq8 6 months ago
fantastic and informative
phooey108 6 months ago
@consdel2000 see wikipedia, Naked_short_selling
carlosjhr64 6 months ago
To clarify the legal situation too: naked short selling (when you don't borrow the shares, but sell something you don't yet have) is illegal most of the time. Basic short selling (what they described) is normally fine, but in a bad economy can cause a feedback loop turning a bad economy into a collapsed economy. This is why basic shorting has been suspended. Naked shorting is basically fraud, there is no "banned for 15 days", it's a crime whenever you do it.
annoloki 6 months ago
@annoloki That's not true. The worry of naked short selling is not "fraud", it's over leveraging or over extended the credit. Short selling is actually a stabilizer for a stock market because investors can interchange and hedge positions. It can also increase liquidity and up-to-date market value. The markets that forbade short position are usually those with slower recovery and lower trade volume.
mercedescl 6 months ago
@mercedescl I agree with the stabilizing position that short selling adds to hedging, but the problem is when insider trading gets into it, and add to that not a very transparent stock exchange, with a capital market authority that has its head underground, you've got yourself a problem. Plus when you with derivatives, its a pain the ass and can OVER leverage your position if you're shorting gimmick doesn't go through
Donzq8 6 months ago
@Donzq8 Insider trading is insider trading; short selling is short selling; derivatives are derivatives. 1 is cheating, 2 is just "buy in the near future", 3 are products that are sold to professional investors. All three are different topics of discussion. Don't mix them all together and claim that short selling is "dangerous".
mercedescl 6 months ago
@annoloki OK, but then what is naked short selling and what's the difference with basic short selling?
Frenchyification 6 months ago
something is a misscoz the explanation dont make much sense!lol reminds me of when they were trying to explain AV voting in the UK!
0157jo 6 months ago
@consdel2000 See my post further down, and vote it up for others
annoloki 6 months ago
Stockmarkets are fuckin stupid, its just gambling
windofthegods 6 months ago
THAT's NOT *NAKED* SHORT SELLING!!!!
carlosjhr64 6 months ago
That wasn't naked but was short because he had the shsres to sell.
Vamavid 6 months ago
naked short selling is different from short selling. google it or read what annoloki wrote. Al Jazeera should correct this mistake.
lalegende007 6 months ago
so you borrow 100$ worth of shares, the price of the shares then go down. You buy back your borrowed shares for 80$, due to the falling stock price. Finally, you make a 20$ profit because you sold borrowed shares to yourself?
Is that how it works?
Rsd79 6 months ago
This is incorrect. Naked short selling is when you sell WITHOUT first borrowing the share, in the hope that you will simply be able to purchase it on the market at a later date for a lower price.
annoloki 6 months ago
@MetallicThor God is also a fabrication, I have more faith in the Easter bunny
Snutih 6 months ago
hold up, i need help cos i dont understand summat: the geezer on the right takes his societe generale stock back which he rented out but now his stock aint worth 100$ bucks but instead only 80 after the naked short sell done by the geezer on the left.
wouldn't that mean that the one on the right lost 20$ on each share and thus made a loss in his portfolio, nevermind the fee he charged the borrower??
dontliethetruth 6 months ago
@dontliethetruth No because the idea is that the stock would be going down in value anyway, so at least this way the lender has made a fee from it. Short selling on its own (described here) isn't really so dangerous, what's dangerous is naked short selling, which is short selling WITHOUT first borrowing the share, in the pure hope that you can later buy it on the open market. This disrupts price discovery as you separate supply/demand which allows for the crashing of a business.
annoloki 6 months ago
@dontliethetruth
I need help with this to. But I think because you sold 100$ of borrowed shares to yourself for 80$, when the stock price fell. You as an individual, was both the buyer and the seller. Therefore, you made 20$ has the seller.
Rsd79 6 months ago
@Rsd79 You sell the share at today's price to anyone who wants it at that price. You buy a share back at tomorrow's price from whomever is selling it at that price. All shares in a business are equivalent, you don't need to be buying it back from whomever it was you sold it to. It all happens auction style. You're betting that people won't be willing to pay as much tomorrow, so sellers will have to sell cheaper.
annoloki 6 months ago
@annoloki
Thanks for the explanation. You say that I am betting that people won't pay as much tomorrow. But the guy in the video says that it is a self-fulfilling prophecy that the share price will go down tomorrow. I am gonna re-watch the video.
Rsd79 6 months ago
@Rsd79 He's mistaken... he's describing normal short selling, but talking about the problem of naked short selling. They have misunderstood what naked short selling is, and so are describing it incorrectly.
annoloki 6 months ago
@annoloki
yeah, looks like I am off to google. I knew there was something wrong with the explanation on the video because it did not make sense.
Rsd79 6 months ago 2
@Rsd79 You rented the shares of someone else at a cost of 1% of whatever money you make to the leaser. You sold them at $100.00/share to whomever would buy, then you waited for the share price to reduce to $80.00 and bought them back and made a $19.00 profit, you must give the leaser what he is owed.
TomMarAlem1987 6 months ago
@TomMarAlem1987
thanks for the explanation. Now I have to watch the video so I can understand the self-fulfilling prophecy.
Rsd79 6 months ago
@Rsd79 Yes, he may want the stock price to reduce in order that he can buy more of it and thus gain more control over the company.
TomMarAlem1987 6 months ago
@Rsd79 With naked short selling, you don't first aquire a loan of the shares to sell. This allows you to sell something you don't even have, and take advantage of the fact that you have a few days before you have to transfer the asset to hide that fact. This allows you to increase supply, without adding any extra demand (no new shares are needed to sell shares that don't exist) which causes a drop in price. Normal short selling creates a demand for a share, so doesn't have the same problem.
annoloki 6 months ago 3
@annoloki
now I see why they use the adjective 'naked' to describe this type of short selling.
thanks, annoloki
Rsd79 6 months ago
@Rsd79 No worries, vote my description up to do a favour for others who're confused by Al AJazeera's mistaken description :-)
annoloki 6 months ago
Basically, you are selling $100 worth of borrowed shares then betting the price will go down. Tomorrow, the price of the shares are 80$. You buy them at the 80$ price. Therefore, after all the transactions in my comment. You bought a share that was previously worth 100$ for 80$. However, to realize this 20$ profit, would you not need the stock price to go back to 100$?
Rsd79 6 months ago
@dontliethetruth Yes, he may want the stock price to reduce in order that he can buy more of it and thus gain more control over the company.
TomMarAlem1987 6 months ago
@MetallicThor thats like saying i cant prove santa clause and the easter bunny are not real.
bloodyhawk989 6 months ago
The moment debt became tradable the economy was doomed.
playgrrrr 6 months ago 27
@playgrrrr They will do anything for money. Very sad World.
thegroove2000 6 months ago
These people don't pay any taxes on these sales transactions. Total Bullshit, the rich preying on the working people.
hoosierhiver 6 months ago
Short selling is much different than naked short selling. Short selling is just betting a stock will go down. Naked short selling is what JPM is doing with silver. They are shorting silver with money they don't even have. They are using bail out money.
pissedoffunemployed 6 months ago
BAN TRADING , it's all crap for criminals who want to make money on the back of people who actually work .
Snutih 6 months ago 3
This former CNN prick on the left is so used to making jokes and being "affable" instead of getting into the real "meat" of the segment, that he can't resist saying, "...naked short-seller. Would it be better if I'm clothed? But that's another thing. Hahaha". I can't believe they hired him at AJE.
BlackCrescentBrigade 6 months ago
Mis-selling, insider trading. Such a lovely profession.
doire7 6 months ago
A "naked short seller" doesn't even have to borrow the shares to sell them, he sells them and buys the shares back before the close so then he has something to give the the original buyer. Thats why its called "naked" because he originally has nothing to sell. A normal short seller is what he is describing.
stretch34318 6 months ago
A criminal offense, banned for 15 days. What a world
TheBullionBoy 6 months ago 37
Comment removed
TomMarAlem1987 6 months ago
@TomMarAlem1987 It also teaches you how to beat your wife. Which I think any reasonable person can acknowledge is an important and reasonable thing to do at certain times. The prophet speaks through you. Salem brother.
jonahfox 6 months ago
@jonahfox, can you cite where, in the qu'ran, there are instructions on how to beat your wife?
mispistoleros 6 months ago
@mispistoleros /watch?v=wfPSN_92v2w It is not in the qu'ran but its interpreters and followers have read and understood the hadith and learned the way of controlling thy wives. Salem!
jonahfox 6 months ago
@jonahfox, in other words, like the sandrehin guidelines to having sex with children under 3 y.o.?
mispistoleros 6 months ago
@mispistoleros Nay brother. Such practices are only followed today by the followers of the prophet (peace be upon him).
jonahfox 6 months ago
@jonahfox, something tells me you're out of touch, only here to stir up shit. now, can you provide one arab name associated with the 2008 wailing wall street meltdown?
B.oycott
D.ivest
S.anction
Israel, the only terrorist, nuclear rogue, apartheid MYTHOCRACY in the ME..
mispistoleros 6 months ago
@mispistoleros OPEC my brother. The only source of income for Arab nations.
jonahfox 6 months ago
@jonahfox, CHILD SEX INDICTMENTS PLAGUE ORTHODOX JUDAISM
By Rev. Ted Pike
13 Jun 2011
New York journalist and attorney Michael Lesher says, “A certain amount of sexual deviance is going to be found in any society. What is really shocking is the extent of license that’s been extended to these people to victimize children and if you are a pedophile, the Orthodox Jewish community is one of the best places you can be…” (In The Wall of Silence, a Canadian TV documentary about haredi sexual abuse
mispistoleros 6 months ago
@mispistoleros Oh Brother! You must be thinking of Catholicism brother. Oh! This is anecdotal. You clearly hate Jews. This is more than just anti-zionism. See Hadith Volume 4, Book 52, Number 176. Salem.
jonahfox 6 months ago
@TomMarAlem1987 only except Allah is not real and a man made fictional entity.
bloodyhawk989 6 months ago
@bloodyhawk989 So said the caveman about the atom when yet he had to discover such a thing?
TomMarAlem1987 6 months ago
Screw the Poor, I want in on this!
deeppurple28 6 months ago
This has been flagged as spam show
Enemy of Greece, Europe, & America ---- Jew
1. Goldman Sachs CEO, Lyold Blankfein is Jew
2. IMF Deputy CEO, John Lisky is Jew
3. Ex IMF CEO, Dominic Strauss is Jew
4. World Bank CEO, Robert Zoellick is Jew
5. Ex World Bank CEO, James Woolfesen is Jew
6. Fed Chairman, Ben Bernanke is Jew
7. Ex Fed Chairman, Alan Greenspan is Jew
8. Obama Treasury Secretary, Timothy Geithner is Jew
9. George Bush Treasury Secretary, Hank Paulson is Jew
Stevie68000 6 months ago