Suggestion by Azolotkov on 2008-03-25 02:46:51
I have a related question. In a situation when an industry (say, financial services) is doing bad as a whole, potentially a bunch of investors could start shorting financial services stock and thus make money. What sets the limit to how much stock they can short? It sounds like an endless opportunity to make money when the economy goes bad. To answer my own question, I'm guessing that the broker from who you're "borrowing" the stock that you think will go down in price, has only a limited supply of said stock, and thus the money making opportunity quickly dries up. Comments and thoughts appreciated.
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Template:Short selling paradox A share sometimes entitles its holder to some rights when it comes to the company at hand. What happens to this right when a share is sold short? Neither the borrower nor the lender of the share actually possess it. So if there is a shareholders' meeting, who comes with the share being sold short? And did the lender of the share approve of being the lender, and knowingly gave up his/her right entitled by the share?