Many people invest money in stocks with the long-term expectation they'll rise in value, but one investment strategy is tied to a stock falling in price: short selling.
Olive Invest compiled a list of some of the most shorted stocks in August 2022 from financial news website MarketWatch. This list includes three pharmaceutical companies and two companies that deal with electric vehicles.
Short selling is the opposite of having a long position, where you buy and hold a stock. In shorting, an investor borrows shares of a company and sells them on the open market in hopes the share price will decrease. If that happens, the investor buys the shares back for less money, returns the borrowed shares, and clears a profit. If the stock price increases, the investor must buy the shares back at the higher price, incurring a loss. It's an oft-maligned, high-risk investing strategy that can net both big profits and big losses. For that reason, it takes serious investing experience to do well.
The concept of shorting stocks has been around for centuries. One of the first examples of shorting a stock was by investor Isaac Le Maire, who shorted the Dutch East India Company in the early 1600s. Unfortunately, however, his efforts to make the company's stock price fall ended in failure.
Continue reading to find out 10 most-shorted stocks in August.