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Friday, 09/13/2013 10:22:10 AM

Friday, September 13, 2013 10:22:10 AM

Post# of 163719
Consider for a moment what happens when shares are sold short.

The short seller has to borrow those shares from an existing shareholder or a broker/dealer who has shares held in a street name account. This borrowing actually doubles that number of shares in existence since both the lender and borrower are committed to the same shares. In order to close out the short sale, the borrower has to buy shares from another shareholder. However, in the meantime, if a long holder bought those borrowed shares in the first place, they, in effect, disappear from the float. If enough long holders, like hyperboy's group who are buying for retirement accounts, buy the borrowed shares, it is likely that a short squeeze will develop whereby it would be more costly for the short trader to cover.

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