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Stock markets

Sarang Bhave (-) (115 Points)

17 August 2011

What does short selling mean with regards to the stock markets?

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Prasad (-) (29 Points)
Replied 17 August 2011

Short selling is the selling of stock that one does not own. A short seller sells a stock that he believes will fall in value. He does not own the stock instead he borrows it from someone who already owns it. Later, he buys back the same amount of stock and returns it to close out the loan. If the stock has fallen in price since he sold short, he can buy back the stock for less than he sold it for. The difference between these amounts is his profit.

Investors can profit by short selling stocks that are likely to fall sharply when the market declines. Short sales are therefore very useful to protect an investors` portfolio from an economic downturn. Short selling also reduces the volatility in the portfolio's returns and helps protect the value of the portfolio when prices are falling.

Reliance Mutual Funds, Person FN and other such online portals have a very extensive Knowledge centre that can help to answer queries such as this one.

(Guest)

Short selling means when you purchase shares of stock. Buy stocks, you buy a piece of ownership in the company. And buy and sell shares directly from the company with a stock broker or can be. The most commonly used agent. They serve as an intermediary between investors and sellers and often charge for their services.

Short selling is selling a stock that the seller does not own. More specifically, a short sale is not owned by the seller is selling a security, but that promises to deliver. This may sound confusing, but it is really a simple concept.

Short selling is regulated by the stock market regulators and certain rules of the stock exchange depending on the country.

Most countries have strict regulations on short selling including restrictions regarding the type of assets that can be sold and the time period within which this trading activity needs to be performed. If there are any dividends or rights that come from the stock during the course of the loan, the short seller needs to pay these back to the lender.

You may also need to open a margin account to indulge in short selling. However, you will need to remember that in addition to being profitable, short selling is also very risky. While short sellers use many ratios to predict whether the price of the asset will fall, there is always the chance that prices may see a hike, which can bring considerable losses to the short seller.

Ramalingam K (Founder & Director - Holistic Investment Planners (P) Limited) (21077 Points)
Replied 06 May 2014

The answer for both the questions is investing in stock market. Once you decide to invest in stock market, you have got two options. The option one is to invest directly in stock market and the option two is to invest through mutual funds.

https://holisticinvestment.in/stock-market-vs-mutualfund

Regards

Ramalingam K, MBA, CFP,

Director and Chief Financial Planner,

Holistic Investment Planners

“Best Performing Financial Advisor Award” Winners from CNBC TV18

www.holisticinvestment.in