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Non-Tech : Inside Trading
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To: Guy Gordon who wrote (44)10/16/1996 5:27:00 PM
From: rainman   of 62
 
Are you sure about this Guy? I was under the impression that short sellers borrow shares they don't own. To me this means if I own 1000 shares of stock, and someone borrows my 1000 shares of stock, the total number still comes to 1000 shares. How does this increase the supply?

Then, if I want to sell my 1000 shares and the short seller isn't able to borrow another 1000 shares from someone else, he needs to immediately purchase 1000 shares from the market. I get rid of 1000 and he buys a 1000. To me, this is still 1000 shares of stock and we haven't increased the supply.

Maybe I'm missing something? Please educate me.

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Of corse short sellers depress the price. How else could it be? They increase the supply of stock for sale when going short.
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