Short selling is a way to bet against companies. Instead of buying low and selling high, short sellers aim to buy radian shares them back cheaper.
**How short selling works**
1. Cash is received upfront.
2. When prices drop, shares are repurchased.
3. If prices rise instead, losses occur.
**Examples**
– During the 2008 crisis, short sellers profited from financial stocks collapsing.
– Retail traders on Reddit pushed prices up.
– Punished those betting against it.
**Benefits of short selling**
– Hedge against long positions.
– Forces transparency.
**Risks**
– Unlimited loss potential.
– Fees reduce profits.
– Emotional stress and volatility.
**Conclusion**
Short selling is for advanced investors. Used carefully, it offers hedging and profit opportunities, but misused, it creates huge risks.
