ill
Superstar
Wuts tha point of doing that?
All it is, is the opposite of buying common stock. When you buy stock, you are betting the price will go up. When you short(borrow) stock, you are betting the price will go down. Basically it covers the ups and the downs in PPS.
For example, Paulson I believe shorted the entire market before the crash in 2008. He bet that the market would tank and prices for stocks would go down in value. He made billions when it finally crashed. He borrowed shares beforehand, and repayed the shares at a much cheaper price when the crash happened thus pocketing the profit difference.