Short selling, or shorting stocks, is a strategy investors use when they believe a stock is overpriced by the market and will decline in value. To concept is essentially the opposite of traditional stock investing. The investor sells the stock first at the current price (using borrowed shares) and then buys it back later (returning the borrowed shares). The investor’s goal is to buy back the stock after it has declined in value, profiting on the difference between the price the shares were sold at and the price at which the shares will be bought back.
