I loved how you broke down the concept of most of us South Africans not understanding SELLING and making MONEY even though some of us are degreed and educated.
Hey Donald, lol I did not clarify the point completely. "Short-Selling" is the action of borrowing an asset (in this case a Share) and immediately selling it in the open market and then buying back the asset at a lower price and returning it to the lender, thus keeping the difference in value that you borrowed it for. Eg: You borrow 100 shares of XYZ Company, each share is priced at R1 (meaning you borrowed R100 worth of shares). You then sell those shares and now have R100 in your account. The share price then goes down by 20% to 80c per Share and then you buy back the shares at this new lower price. You spend R80 buying (100 x 80c). You return the shares to the lender and keep the difference of the value you borrowed them for and the value they have now (a profit of 20c per share), since you had borrowed 100 shares your profit would be R20. This is how short-selling works. I hope my explanation was clear. So you can see that it is in the interest of a short-seller to have the price go down. And anyone can short-sell, brokers like IBKR will give you a margin account to do this, so it is not just for Hedge funds 😀.
