But the whole concept defies logic.
You are borrowing an asset to sell it on the market. The only place in the world you can do that is the stock market.
What other asset do you sell but hope to buy it back later at a lower price?
Just because you can make a market out of something doesn’t make it practical or as someone else put it.. efficent.
Futures markets work in exactly this way, and even worse, for every long there is a short because they are opposite sides of the same contract. And hedgers and producers enter into futures contracts exactly because they are speculating about future market prices and the consequences. A baker buying wheat thinks the price might go up, or is betting it won't go down. Otherwise he would simply purchase in the cash market. A producer is betting the price will go down, or at least won't go up.
Short sales are often a way of hedging down-side market risk for transactions. They serve multiple valid purposes.
I am involved in the negotiation of the acquisition of company a by company b. I acquire shares of company b, whose price will be higher when the merger occurs. But I don't want the risk that the overall market will drop, so I short shares in company a, thus betting only on the likelihood of the merger occurring and not the overall direction of the market.
I have an overseas tour company that does $50,000,000 in business in Europe, tours price in dollars, but the transactions are actually in Euros. I don't want to take the risk of adverse currency moves, since my business is otherwise profitable so I purchase currency futures. Somebody in Europe doing the opposite sells the same future I just bought (or some middle man buys and sells these futures, making a small commission while keeping his risk low by holding a portfolio of these things).
Short sales, sales at today's price, for a future delivery are a legitimate part of free market transactions.
Naw, I didn't think so........