finch2: "Nobby what happens if Fred's tomatoes are bad for three years in a row not just one?"
He may try to continue to borrow tomatoes from the other farmers, in which case Fred would look something like: 100, 100, 50, 50, 50, 50, 50, 50, 50, 100. Rather than 100, 100, 0, 0, 0, 100, 100, 100, 100. But at some stage I'm sure the other farmers would lose confidence in Fred's ability to manage his farm and refuse (as it would involve them taking losses over those years).
fatsoh: "surely fred should be using the good years to leverage up the bad years so he is not selling something he doesn't own"
Sure Fred could've done that. But, then you risk losing market clients, because you couldn't supply them for a year.
Starbust: "Well in that case he should just borrow money from the bank to cover the bad years"
As above. Not sure why Fred would want to become indebted to a bank (and be charged a truckload of fees and interest); what's wrong with becoming indebted to another farmer (if indeed the other farmer is willing to lend)?
davo77: "Fred would borrow those tomatoes at an agreed price. Freds neighbours would not accept a lower price for those tomatoes"
People accept lower prices all the time. Never make a losing trade ever before? why stubbornly hold onto the belief that every is profitable?
davo77: "If he does this and regrows tomatoes he is a producer NOT a shorter. shares cannot be produced through photosynthesis and fertilisation."
Here's an example of a gold company I use to hold, SGX went short the gold market at ~ $600 - they sold gold they hadn't produced. Worked a treat for them... NOT. I'd say they were shorters in the commodity that they produced, sometimes works well for them (ie if they had gone short at $1000); but in many cases ends in disaster. What are you suggesting, shares are produced through magic? AccabraDaccabra and there they are? LOL... not quite mate. And you can easily interchange shares/stocks in the example I used.
fatsoh: "those that argue that shorting is good conveniently over look the fact that those who borrow the stock will have by far and away bigger volumes to sell into the market, thereby triggering stop losses and instilling psychological downward pressure on a security. therefore, they are not 'hoping' the sp falls, they are in the position to make the sp fall"
And look what I do here to your statement:
"those that argue that LONGING is good conveniently over look the fact that those who LEND the stock will have by far and away bigger volumes to BUY into the market, thereby triggering BUYSTOPS and instilling psychological UPWARD pressure on a security. therefore, they are not 'hoping' the sp RISES, they are in the position to make the sp RISE"
See the market works both ways. It sometimes goes into an exponential upward phase, and also sometimes goes into a freefall phase. Sometimes your investment grows while mine shrinks, and sometimes my investment grows and yours shrinks.
