[capaxess]

I dont quite understand the entire process of shorting borrowed stocks and why is it that if the stock goes up the shorter need to purchase the stock to "cover the postion"... Would you mind breaking this down for me here in the forum? Perhaps even walk me through the process of placing a short on a stock myself through the TD Ameritrade platform.. I am sure other members and lurkers can learn a thing or too as well..

OK so, "Shorting" means: selling now with the expectation that I buy back lower profiting the difference. In order to short a stock you have to either own it or borrow shares from someone else. That someone is a firm (like TD Ameritrade) who lends you the shares so you can sell them. They get a fee for lending you the shares which they collect until the shares you borrowed are returned. Since you owe shares not money, replacing the borrowed shares you sold at $10 with shares you purchased later at $5 for example results in a $5 dollar gain minus the carry cost of the borrowed shares (which is usually minimal).

In practice this process goes at light speed since most trading accounts offer "Buy", "sell" and "sell short" options which are executed in nanoseconds. The difference is profound however since when you buy a stock all you can lose is what you paid (plus what you borrow if on margin). A short however, has unlimited downside risk because there is no limit to how high a share of stock can go up. Enter Gamestop and some other stocks which have been shorted NAKED with shares well beyond the actual shares outstanding.

That is, the entire financial system is at the verge of collapse because, as these 'SHORTED" stocks keep rising (which they could very reasonably be expected to continue), there are massive numbers of retail investors ready to shove these losses strait up Wall Street's ass. Although that might not sound like a bad idea considering what a nice bunch of folks they are, the repercussions of their collapse will effect even the most sacrosanct of obligations. Hope that helps understanding of the issue, enjoy the show! Buy Silver!