Friday, September 19, 2008

Ban on Short Selling

A ban on short selling financials plus a government rescue plan equals possibly the biggest day we have seen in years.

Short selling is when a person borrows stock from their broker, sells it, and then buys it back at what is hoped to be a lower price. They then repay the number of shares back to the broker and pocket the cash difference.

I never did believe in short selling because the very action itself drives down the price of a stock and it is very risky since it can really hurt you if you are forced to buy back or "cover" at a higher price. Watch today, because it is going to be a whopper!

- Roger

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