Queston about short selling/stock market.

If someone wants to buy some shares in a company, are there always some available, and if so where/how? Is there some sort of pool, or does the purchaser keep offering more until someone will sell? I was thinking about short selling and the point at which the seller has to buy back and return the shares they borrowed – how can they be sure that they will be able to buy some to return to the original holder? Or what happens if they can’t?

Only when there is a share issue (either an Iinitial Public Offering – “IPO” or a new issue – “Rights Issue”) doies there exist a new “pool” of shares that can be bought.

The rest of the time, as you say, you have to buy shares from other shareholders.

Short sellers have to buy from the market to settle their contract. The problem comes if there are more short contracts then shares being offered for sale – the whole farce about VW/Porshce being worth oodles of money earlier last year is exactly what happens when that occurs.

<http://business.timesonline.co.uk/tol/business/industry_sectors/engineering/article5033654.ece&gt;

Are you wanting to go broke?

Do a course, or read a book (Dummies are a good start), but don’t take advice from people who may not have any experience of the markets.

nice horse you have there epicyclo….my, it’s high….

The OP didnt say he was going to go out short selling dimwit!

Just that hed been thinking about how it all worked.

sheesh. They should issue licences for people to post on forums…

Sorry Stoner, didn’t see your posting – I must have been doing mine at the same time. I wasn’t referring to you.

I was talking generally, but I stand by what I have said, and I do know a little about the subject. (It’s why I don’t have to go to work 🙂 )

There’s no way the OP is going to know if the person answering him has any real knowledge or otherwise. Suggest he reads “The Richest Man in Babylon” as a good start in where to get advice.

There are market makers who keep things fluid and mean that you don’t have to go and find someone wanting to sell their shares to buy yours off. Most of the time anyway.

I have bought and sold the odd share in the past and had some success and failure (never huge amounts – £500 here and there). I would definitely recommend buying a book or two if you are thinking of diving in. If you are though, you are choosing a very volatile time.
I never did the whole short selling thing.

I’m pondering how it works, not thinking about getting involved! Appreciate your concern though.

Short selling – A offers to sell B some shares of company X at a set rate some time in the future. A makes money buy buying the shares at a lower price between when the deal was arranged and when the shares need to be sold to B.

Trouble starts when the shares don’t fall in price sufficiently for A to buy the shares at a low enough price to make a profit and complete the deal. When this happens, there may be benefit in imagineering information about company X which could reduce its value (share price).

Market makers have an obligation to keep the markets fluid by guaranteeing the availability of certain amounts of some shares.

At least that’s my understanding of it…..

The Naked Trader is a reasonable source of information to get you started or put you off for life!