Here is how the short selling scheme works: stock prices are set by traders called “market makers,” whose job is to match buyers with sellers. Short sellers willing to sell at the market price are matched with the highest buy orders first, but if sales volume is large, they wind up matched with the bargain-basement bidders, bringing the overall price down. Price is set by supply and demand, and when the supply of stocks available for sale is artificially high, the price drops. When the bear raiders are successful, they are able to buy back the stock to cover their short sales at a price that is artificially low.
Rubbish. Shortsellers help to provide equilibrium in a market. They help to dampen euphoria in a rising market. And, since they are usually theprimary buyers when a stock is droping, they also dampen panic and despair. Of course when a stock rebounds, the unfortunate shorts provide much of the fuel. Shortselling, in one form or another, is essential to healthy markets.
It is also dilutive to the stock price. Even though the stock is supposed to be borrowed it is still extra selling volume that needs to be consummed by the buyers. To me the actual float is the real float + the share short that had to be purchased at some point (although they cannot be sold again it was dilutive during the selling process). Although it ends up being rocket fuel if the stock rises.
That plus naked shorting, where the shares are never actually borrowed from anywhere, is still likely happening. Never saw an honest financial person. ANYTHING FOR A BUCK!!!! Its only illegal if you get caught.