Shorting stocks: Gaming for profit, at a cost

Global Business

If it works, betting against a stock can mean a pretty profit for a savvy investor, but the same can’t be said about the company whose stock is being shorted.

The practice can lead to dangerous consequences for a stock market and its investors.

CCTV’s Karina Huber reports from New York.

Shorting stocks: Gaming for profit, at a cost

Shorting stocks: Gaming for profit, at a cost

If it works, betting against a stock can mean a pretty profit for a savvy investor, but the same can't be said about the company whose stock is being shorted. The practice can lead to dangerous consequences for a stock market and its investors. CCTV's Karina Huber reports from New York. Gamestop, the video gaming retailer, was one of the most heavily shorted stocks on the S&P 500 last year. At one point, more than 50 percent of its outstanding shares had been sold short, which means a majority were betting the stock price would fall. Some have accused short sellers of being destructive, because their bets can sometimes drive down a company's stock even when it has a good product or service.

Gamestop, the video gaming retailer, was one of the most heavily shorted stocks on the S&P 500 last year.
At one point, more than 50 percent of its outstanding shares had been sold short, which means a majority were betting the stock price would fall.

Some have accused short sellers of being destructive, because their bets can sometimes drive down a company’s stock even when it has a good product or service.


A closer look at how to “short” a stock

The film The Big Short is a look into events leading to the 2008 global financial crisis. It focuses on the people who predicted the collapse of the U.S. housing market, and decided to bet against it, or in trader lingo: “short” the whole market.

A closer look at how to \"short\" a stock

A closer look at how to \"short\" a stock

The film The Big Short is a look into events leading to the 2008 global financial crisis. It focuses on the people who predicted the collapse of the U.S. housing market, and decided to bet against it, or in trader lingo: "short" the whole market.


Craig James on shorting the market
CCTV America’s Michelle Makori spoke to Craig James, the managing partner at Precision Advisers.

Craig James on shorting the market

Craig James on shorting the market

CCTV America's Michelle Makori spoke to Craig James, the managing partner at Precision Advisers.