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by Daniel_Newby
5869 days ago
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Naked shorts are basically selling counterfeit stock and should be banned. If I saw a naked short seller being burned at the stake, I wouldn't even spit on them. Covered shorts are a way of renting out a long-term investment that you do not need at the moment. Renting out equity means that the arbitrageurs use it to make the market more efficient. This gives a buyer an improved price today and a seller an improved price tomorrow, with the short seller taking a modest cut for the valuable service they have provided. An analogy is separating land rights (long term investment) from mineral rights (consumption good). |
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