|
Re: Concept I don't quite understand
Yes you can! It is called short selling. You borrow stock (mainly from your broker) and sell it back into the market in hopes that it drops in price so you can repurchase it.
An example:
I borrow 100 shares of XYZ at $1 a share
I sell it collecting the 100 bucks
If it goes down to .75 a share, I made 25%. This happens because I buyback the shares at $75 and return them to the broker. So I get to keep the $25.
Transaction costs are not included in this example and you will have to take them into account like any other business cost.
|