[Harmless Teddy Bear]

What possible good (other than the short sellers making money) comes from short selling?

It allows you to force your competition out of business.

Lets say you own YY Widget company.

You have a up and coming ZZ Widget company nipping at your heels. They do things you will not, like make a smaller, stronger widget and they allow people to re-sell their widgets when they are through with them.

So you talk with your old buddy that works with a hedge fund and tell him that you know a way he can make a bunch of money.

They do a short go on CNN and spread some lies and the price of ZZ stock falls. They make more money, you get rid of an annoyance and you will be able to pick up some prime people at bargain basement prices when they are out of a job because their company collapses.

Its a win for everybody!

[Toddsterpatriot]

So you talk with your old buddy that works with a hedge fund and tell him that you know a way he can make a bunch of money.

They do a short go on CNN and spread some lies and the price of ZZ stock falls. They make more money, you get rid of an annoyance and you will be able to pick up some prime people at bargain basement prices when they are out of a job because their company collapses.

Even though the price of ZZ stock falls, ZZ has better products and better service and their sales keep increasing. Their profit is higher than the profit of YY Widget.

Why does the company collapse just because some guy on CNN lied about ZZ earnings or sales or whatever?