Imgflip Logo Icon

Yes, I just posted this on FB.

Yes, I just posted this on FB. | HERE'S WHAT IS BASICALLY HAPPENING WITH GAMESTOP One way to make money on stocks for which the price is falling is called short selling (or going short). Short selling is a fairly simple concept—an investor BORROWS a stock, SELLS the BORROWED stock, and AFTER THE PRICE FALLS BUYS the stock back to RETURN IT to the LENDER. 1) LENDER *lends* BORROWER 100 shares WORTH $25 each 2) BORROWER *sells* the BORROWED stock, RECEIVES $2,500. 3) PRICE DROPS TO $10. 4) BORROWER *buys* 100 shares for $1,000 5) BORROWER RETURNS 100 shares to LENDER 6) BORROWER *keeps* $1,500 ------------------------ When REDDITORS started GROUP BUYING it INCREASED the price of the stock, e.g., from $25 to $1,000 per share. *AUTOMATIC* PROGRAMS KICKED IN AND STARTED DOING MASS PURCHASES--which INCREASES the stock price. Redditors SELL at the HIGH value. 🤣 BORROWER has to BUY at the HIGH value, e.g., 100 shares at $1,000 EACH to RETURN the BORROWED shares. 😨🥶😱🤬😭 ------------------------ YES -- THE EMOJIS *ARE* OFFICIAL NEW YORK STOCK EXCHANGE SYMBOLS. 😂 | image tagged in gamestop,reddit,rick75230 | made w/ Imgflip meme maker
129 views • 7 upvotes • Made by Rick75230 4 years ago in frontpage
gamestopredditrick75230
2 Comments
Rick75230
1 up, 4y,
1 reply
I'm an attorney and accountant, not an economist or finance person. The basic explanation about "borrow, sell, buy, return" is from investopedia.

The bottom line is that stock is OWNERSHIP of PROPERTY. Just as you can LEND somebody your car and they can use it for Uber or they could RENT it to someone, if you LEND stock, THEY get to keep INCOME, etc.

Why would someone LEND stock? They might actually be RENTING it--"You pay us $10 per share for USE OF the stock for 3 years. We'd rather KNOW we have $1,000 NOW than MAYBE collect $4 per year. Or maybe they gave use of the stock in exchange for a loan.

If the stock goes DOWN in value during the loan period--it would have decreased anyway. If it INCREASES in value, the lender gets back shares worth more. The lender cares about the NUMBER of shares, not whether they are the SAME shares loaned. If you lend somebody $100 in $20's and they give you back $10's, you don't care.
CountBonkulus
0 ups, 4y
Exactly, there's nothing wrong with short selling. It's just a part of free market capitalism, and like all investments, there is risk involved.
Created with the Imgflip Meme Generator
IMAGE DESCRIPTION:
HERE'S WHAT IS BASICALLY HAPPENING WITH GAMESTOP One way to make money on stocks for which the price is falling is called short selling (or going short). Short selling is a fairly simple concept—an investor BORROWS a stock, SELLS the BORROWED stock, and AFTER THE PRICE FALLS BUYS the stock back to RETURN IT to the LENDER. 1) LENDER *lends* BORROWER 100 shares WORTH $25 each 2) BORROWER *sells* the BORROWED stock, RECEIVES $2,500. 3) PRICE DROPS TO $10. 4) BORROWER *buys* 100 shares for $1,000 5) BORROWER RETURNS 100 shares to LENDER 6) BORROWER *keeps* $1,500 ------------------------ When REDDITORS started GROUP BUYING it INCREASED the price of the stock, e.g., from $25 to $1,000 per share. *AUTOMATIC* PROGRAMS KICKED IN AND STARTED DOING MASS PURCHASES--which INCREASES the stock price. Redditors SELL at the HIGH value. 🤣 BORROWER has to BUY at the HIGH value, e.g., 100 shares at $1,000 EACH to RETURN the BORROWED shares. 😨🥶😱🤬😭 ------------------------ YES -- THE EMOJIS *ARE* OFFICIAL NEW YORK STOCK EXCHANGE SYMBOLS. 😂