9 Comments
 

Saw him on a different program last night, and while much was the same - when pressed he had a pretty good description about how these guys aren't evil, because if everyone thought the way they did, it wouldn't have been a crisis and he mentions reports filed to the SEC, for whatever those could have been worth...

 
Best Response

Anytime I have to explain short selling to a market novice, I do it thusly:

Me: You know the way to make money in the market is to buy low and sell high, right? Him: Of course... Me: Well, you don't necessarily have to do it in that order. If you sell something first, you're hoping that the price drops so you can buy it back later at the lower price. Hence, buy low - sell high, just in the reverse order. Him: But how can you sell something you don't even own??? Me: You just borrow it from someone who does own it. Then, when you need to replace it, you just buy it back and give it to the original owner -- hopefully for less money than you sold it for. Him: Oh. Well that doesn't sound so bad... Me: It's the exact same concept as buying something and hoping the value goes up. You're just selling something and hoping the price goes down. Same same. Him: OK. I get it now.

Hope that helps when you inevitably have to explain short selling to friends and family.

 
Edmundo BravermanAnytime I have to explain short selling to a market novice, I do it thusly:

Me: You know the way to make money in the market is to buy low and sell high, right? Him: Of course... Me: Well, you don't necessarily have to do it in that order. If you sell something first, you're hoping that the price drops so you can buy it back later at the lower price. Hence, buy low - sell high, just in the reverse order. Him: But how can you sell something you don't even own??? Me: You just borrow it from someone who does own it. Then, when you need to replace it, you just buy it back and give it to the original owner -- hopefully for less money than you sold it for. Him: Oh. Well that doesn't sound so bad... Me: It's the exact same concept as buying something and hoping the value goes up. You're just selling something and hoping the price goes down. Same same. Him: OK. I get it now.

Hope that helps when you inevitably have to explain short selling to friends and family.

They don't actually get it

 

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