Hi Ga Bard; If you own your shares as certificates in your hand they can't be borrowed from you and sold short. That's the case that is similar to your apples and your neighbor's apples.
If you put your shares in a brokerage (in a margin account), you no longer have direct ownership of the shares. There are no shares in your name. Instead, they are in "street name". You don't lend your shares out, the brokerage does.
Basically, when you have shares at a brokerage, you only think you own them. In fact, there are not necessarily any such shares in the possession of the brokerage. It is possible (but unlikely due to insurance &c.) that your brokerage could go under and carry all your stocks away with it.
Think about it. If you bought a car, would you leave it at the car sales lot? People leave their shares at the brokerage because it's convenient, and the brokerage sometimes sells those shares to more than one person. If you don't like this, why are you leaving your shares at the brokerage?
In other words, the shares that get sold short are not owned as simply as one owns an apple orchard.
If you wanted to own your shares through a brokerage that won't lend them out you have that option. You may have to look around, it may cost you extra expenses, but you can do this. Your loaning your shares to short sellers is entirely voluntary.
-- Carl |
