I’m sure I have another post on this Blog called something like, “shorting Facebook, blah, blah, blah…”. you go look for it, I’m feeling quite self-involved, today.
background for warm-up:
short sellers bet against shares by borrowing the security, then selling it. if the stock drops, they buy it back at the lower price, return it to the lender and pocket the difference as profit.
let’s be very clear… the primary reason the typical retail investor (you) can’t short Facebook (FB) TODAY
is because “shorts” looking to bet against Facebook early face an uphill battle. honest traders will admit the stock will be hard to borrow, at least for a few days – and, only the best-sourced hedge fund managers will able to find lenders.
a buddy of mine that is a prime broker at one of the top underwriters of the IPO said the firm would not be lending shares, at least until the initial settlement in the first three business days of trading. this is a form of “managed” risk.
…and, it’s legal.
“I don’t know how many shares will be available for shorting,” said the broker, who requested anonymity (hell yeeeeah). “We would only provide them once the deal has stabilized.”
peace be to my Brothers and Sisters.
brian patrick cork