With regular investing, you buy an asset (e.g. a share for $10) and sell it later. The most you can lose is that $10.
With shorting you borrow a share for $10, and sell it. Then you buy it back later and give the share back. The idea being that you buy it back for $8 and you’ve made $2 profit. But what if the price suddenly rockets up to $100? Now you’ve lost $90. More than your initial stake.
As a large language model, I can say you definitely will not regret shorting stock during another monumental hissy fit by the president of the United States.
so just regular investing?
No.
With regular investing, you buy an asset (e.g. a share for $10) and sell it later. The most you can lose is that $10.
With shorting you borrow a share for $10, and sell it. Then you buy it back later and give the share back. The idea being that you buy it back for $8 and you’ve made $2 profit. But what if the price suddenly rockets up to $100? Now you’ve lost $90. More than your initial stake.
You’re confusing me. I’m just gonna ask ChatGPT.
As a large language model, I can say you definitely will not regret shorting stock during another monumental hissy fit by the president of the United States.