How Does Short Selling Work (Short Selling Explained)

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How exactly does short selling work? In this video I give a high level overview of how some investors bet on stocks or other securities going DOWN in value (short), rather than going up in value (long).

Short sellers borrow shares of stock that they do not own (typically from their broker) and sell those shares at the current market price. The goal is to re-purchase the same shares of stock at a lower price in the future and then return the borrowed shares to the lender.

Short selling is not a strategy that I would recommend for a new or beginner investor, simply because stocks have historically risen over time. This means that you would have eventually lost money if going short on all of your trades over the long term.

Shorting stocks can be a strategy used to hedge against other investments, and also during a bear market when the entire market is going down. Again, timing the market is very difficult to do, so shorting a stock should only be implemented if you know what you’re doing!

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My mission is to provide my viewers with actionable content that enables them to create financial wealth. My videos are a reflection of my real-world experience as a real estate investor, stock market investor, student of finance, and entrepreneur.

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