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Non-Tech : Market Makers - What They Do and How They Do It
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To: Richard L. Williams who wrote (200)3/15/1999 12:29:00 AM
From: eims2000  Read Replies (1) of 429
 
Actually, I was saying that you CANNOT sell any stock short that you do not have in inventory. If you could then you could take the price to zero. The stock must physically exists, otherwise it would have no value. MMs may have a large inventory of stock at times and very little at other times. I am sure that they try to manage this inventory (by selling it when the price is declining and buying it when the price is rising) but they cannot simply "create stock out of thin air". That would devalue the stock very very fast. In other words, the price of the stock would drop much more rapidly than it does now.
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