Tuesday, August 10, 2010

Short Publishers

Say you believe a publicly traded company stock will go down in value for whatever reason.  Shorting is a finance market technique in which you borrow the stock of a company, promise to return the stock someday,  and sell it for cash.  You hold onto the cash until the value of the company stock drops, and then buy some of that stock.  Say you borrowed the stock on May 1 and sold it for $1; and the value of the stock dropped to 60 cents on May 15. On May 15 you buy the stock at 60 cents (with the money you got selling the stock on May 1.)  And now you return the stock to he from whom you borrowed it on May 1.  There are nominally fees all around that make it worth while to all players, but the essential thing is you just made 40 cents "shorting" a stock.

The more people short a stock, the more the market thinks there is something wrong with a company.

Here are are a group of publishers who are heavily shorted, meaning many people think they will do poorly in the near future.

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