shorters, page-55

Ugetreal! Just a scenario how it works.

1) Assume fund manager initially bought at $4.00 (a few years ago). At $6.00, fund manager wants to buy more BUT NOT at $6.00, want to buy at $3.00. The fund follow index closely so cannot sell too many shares to push share price down. How does fund manager buy more shares at $3 if without short sellers? Can't!

2) Lend to short sellers, collect premium AND dividends. Let short sellers crash the market to push down to the price long-buyer wants to buy eg $3.00.

3) Short sellers pushed down to $3.00. The same fund manager bought more shares at $3.00 (as sp fall, fund manager needs to top-up to re-balance the weight to follow the index).

4) Sp recovers to $6 later on in the long run.
Fund manager makes profit from:
a) $4 to $6 - the initial purchase
b) Short-seller premium
c) Dividends
d) Bought more shares at $3 (move to $6)

Without short-sellers, fund manager cannot get (b) and (d).

Once get back to $6, the fund will be overweight so fund manager trim down to rebalance weighting.

This just a scenario how short-sellers essentially help long holders make money. Just IMHO.

I initially bought at $3.45 (after trading halt) now make big profit. Thanks to hedge fund like Jim Chino.

Thank you very much short sellers, you make me rich.