TeachMeFinance.com - explain going short
going short -- a strategy in hedging by which investor commitments to buy loans are obtained before the loans are actually made. In securities markets, the term means selling something before it is owned. That which is sold must subsequently be purchased by the seller and delivered to the buyer. Investors use this technique when they believe market prices will fall. Thus they sell at one price something, they hope to purchase later at a lower price to deliver to the buyer.
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