A very basic and 'none nuanced' hypothetical,
I've purchased shares at 40cents and loan these out at 6% interest. The 'shorter' sells the shares at 40 cents and waits/assists the share price to drop to 20cents, buys back the share. Hands the shares back to the original purchaser who has made 6% interest but has lost 50% of the value of the shares!?
I know this is oversimplified but a lot of people I've tried to explain shorting to raise this and I just can't logically explain it. Can anyone with better knowledge than me in the financial/share markets enlighten me?
General comments/chat, page-24146
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