How to Short a Stock

Video Transcript

"Hello everyone this is Chris Markowski, president of Markowski investments and host of the watch dog on Wallstreet radio show. Here to tell you how to short stocks boohoo the evil short sellers they get a bad rap there. Well I don't think that they are so bad and actually they serve a purpose. Granted, short sellers that don't follow the rules that do something called naked shorting, and that's not something that you do at a college fraternity party, that's bad. But shorting a stock actually brings some kind of semblance to the overall markets. It finds value. Shorting a stock what it is is basically you are selling something, you are selling something, you are selling a stock that you don't own. Hmm that sounds kind of strange. How do you sell something you don't own. Well you borrow it. But on Wall Street what you borrow you must return. What you are doing is you are basically betting on that securities value to drop. So if you have XYZ company that you think is a dog and it doesn't belong at fifty dollars a share, so you go ahead and you borrow the shares at fifty and sell them. And then when the stock drops, if you are right, lets say to forty, you buy back the shares at forty and then return them and you make the difference. So you can make money when the stock market is going up and the stock market is going down. But there's obviously risk involved with all these various different scenarios. That's how you short a stock. This is Chris Markowski your watch dog on Wall Street."