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Microcap & Penny Stocks : AmeriResource Technologies (ARET)
ARET 0.00010000.0%Dec 26 9:30 AM EST
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To: nimbus who wrote (5491)1/30/1999 8:30:00 AM
From: Richard Mazzarella  Read Replies (1) of 7609
 
nimbus, <<nobody else bought the stock>> They sell stock they don't own or have possession. When you legally short sell you borrow stock from someone else and sell it. The value from sale of that stock is placed in your account. Naked short sellers sell stock they don't own, however they still get paid and put that money in their account. Someone will always buy stock, even when the company is sick, the question is just the price. Even Chapter 11 stock is traded. My point is that someone will always buy and the stock trades as the price lowers. "True believer" investors will average down, bottom fishers will take a chance on recovery, and some will buy just for the ticker value (sell an already formed public company). The stock will trade, but lower. When the price gets low enough any legal or illegal shorter can also buy at the lower price to cover and pay off the shares they borrowed or promised. They then keep the difference minus commissions (or costs) of the price they sold and the price they bought. If the company dissolves before covering, any cash they hold from their short sale minus commission is theirs. There are also permutations, but these are the main points.
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