Shorting Stock

Kia Ora,

Thought I would continue with some more around stocks today as I received an email from one of my sources on the subject of shorting stock.

What caught my eye is a point that I probably didn't make that well with options.

When you short a stock you sell what you don't own. The broker has checked that they can borrow the stock & you believe it is going to go down. If it does you then buy it back & the broker returns the borrowed stock to the owner.

Now the concept you can trade or buy & sell something you do not own is something most people struggle with.

But it fits perfectly with the Rich maxium of "Own nothing control everything".

Though I haven't looked at it, I think this is along the lines the Carbon credits & emission trading scheme will work.

You will own say a block of forest & the person polluting will then pay to borrow your credits so they can continue polluting. Or even better someone will sell your credits to someone else after they have paid a lower amount to borrow them from you. It is all about making a market out of nothing.

It has nothing to do with making the environment better. It is just another derivative bubble to keep the economy expanding they hope. One is down so lets come up with another idea.

Warren Buffet has called derivative trading in particular Options "Weapons of Mass Destruction". That doesn't mean he hasn't used derivatives, futures in particular, it is just he is very aware of how good & bad they can be.

It is the same old story before you invest in anything do your homework.