Short selling involves selling a borrowed stock or other asset with the expectation that the price will decrease, allowing it to be bought back at a lower price and returned to the lender for a profit. It’s a speculative strategy that carries substantial risk but also offers the potential for significant gains.
Short selling has been practiced for centuries, with the first recorded instance occurring in the 17th century. It gained prominence during the Great Depression when investors sought to profit from falling stock prices. Today, short selling is a common practice among hedge funds, investment banks, and individual investors.