Thursday, 30 October 2008

Picture : 30th October Who said that Short Sell is Good ???

" ... The root of the hedge funds' demise lies, appropriately perhaps, in the murky practice of short selling, in which traders seek to make huge sums by betting on the share price of a company falling.
Traders agree to sell shares in a company (in this case VW) to a third party at a fixed price and by a certain date, then wait for the price to fall before buying the shares and handing them on to the third party.
The difference between the agreed sale price and the price at which the trader buys the shares is profit. But if the share goes up, traders are exposed to potentially limitless losses ..."
Payback time for the hedgies? Gordon Rayner, The Telegraph (en)

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