Comments on: The One Minute Case for Stock Shorting http://oneminute.rationalmind.net/stock-shorting/ The One Minute Case is a new collaborative blog which will present a brief argument about a controversial issue that can be read in about a minute. The goal is to publish one case per day. You can read the cases to learn something new about an issue or use them as a source for longer arguments of your own. Mon, 08 Sep 2008 12:27:24 +0000 http://wordpress.org/?v=2.6.1 By: Galileo Blogs http://oneminute.rationalmind.net/stock-shorting/#comment-4886 Galileo Blogs Thu, 20 Dec 2007 13:36:27 +0000 http://oneminute.rationalmind.net/stock-shorting/#comment-4886 Good question, and my apologies for not responding sooner. A rising or falling stock price does not directly provide or take away money from a company. It only affects the company when it needs to raise new money from investors in a stock offering. So, successful short selling where it is accompanied by a fall in a company's share price, reduces the amount of money a company can raise in a future stock offering. Conversely, if a company has a rising stock price, it can raise more money in a future stock offering. A rising or falling stock price affects a company's ability to finance future projects. Good question, and my apologies for not responding sooner.

A rising or falling stock price does not directly provide or take away money from a company. It only affects the company when it needs to raise new money from investors in a stock offering. So, successful short selling where it is accompanied by a fall in a company’s share price, reduces the amount of money a company can raise in a future stock offering.

Conversely, if a company has a rising stock price, it can raise more money in a future stock offering.

A rising or falling stock price affects a company’s ability to finance future projects.

]]> By: James http://oneminute.rationalmind.net/stock-shorting/#comment-4337 James Thu, 06 Dec 2007 18:10:56 +0000 http://oneminute.rationalmind.net/stock-shorting/#comment-4337 Galileo: I know this is an elementary question, but how does a company lose money if its stock price diminishes (per the quote in the preceding comment)? If no short explanation is possible, is there a good book or essay you could direct me to for the answer? Galileo: I know this is an elementary question, but how does a company lose money if its stock price diminishes (per the quote in the preceding comment)? If no short explanation is possible, is there a good book or essay you could direct me to for the answer?

]]> By: Tim Swanson http://oneminute.rationalmind.net/stock-shorting/#comment-4323 Tim Swanson Thu, 06 Dec 2007 13:12:47 +0000 http://oneminute.rationalmind.net/stock-shorting/#comment-4323 That was one of the clearest explanations I have come across. Especially hard-hitting was: "By taking financial capital away from poorly run companies, short sellers free up money that can go to the best-run companies." I'd like to see one on the bullied concept of "gouging" too. That was one of the clearest explanations I have come across. Especially hard-hitting was:
“By taking financial capital away from poorly run companies, short sellers free up money that can go to the best-run companies.”

I’d like to see one on the bullied concept of “gouging” too.

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