So I read in the other thread about shorting, you loan stocks off someone hoping that they'll go down. I get how the financials work of it but what does the owner of the stocks get out of it? why would he want to loan you stocks? maybe an admin fee but what, is there a cost over the months or something that you're doing it as part of the loan? and how do you set it up, just through your broker?
so you loan the stocks and they plummet, why have they got to get them back off you? wouldn't it be better if they just "forgot" about it and not give you the cash back for it?
QTDDTOT because newb questions itt
>>1384894
Good thread. Novice at this stuff, but here's my understanding of it.
interest accrues as long you leave the position open.
they can't just forget about it, any more than you could forget to pay them back. you enter into a contractual agreement with them so any breach of this agreement would lead to legal action.
>>1384894
not a prob, everyone starts somewhere
like most things, because the person lending you the stock is getting something out of it - you're paying for borrowing the stock.
generally, the people that are lending the instrument you'll be borrowing are long term holders - actuaries, penson funds, investment trusts, etc. They've got it sat there, accruing, dividends, etc going nowt. You wanna borrow it, sure - 5% please.
and that's about it
no offense, if you're a small time person, just dipping in for a look, maybe you want to look at contracts for difference - you're basically making a 1-2-1 bet with someone that the value of something will change and you pay/get paid on the delta.
best of luck
>>1385468
>the person lending you the stock is getting something out of it
Actually, they're not getting shit.
The brokerage is the one getting paid, the owner of the stock (you, if you hold longs) gets nothing.
>>1385546
That's not entirely true. If you hold the shares in a cash account (not a margin account) and tell the brokerage that your shares are not to be lent out, the brokerage cannot lend out your shares to the short sellers.
Also, people who lend out shares can actually make a good amount of money, especially when there is greater short interest than there are shares available to borrow for shorting. New Century Financial (a subprime lender) was one such stock during the housing bubble.
There was a news story during that time about a lawyer who owned a lot of shares of New Century Financial (I seem to recall over $1 million worth). He was being paid 5% - 10% per annum to lend out the shares and the people who borrowed the shares were, of course, also responsible for paying him the stock's 5% dividend.
The news story had a quote from him where he seemed particularly pleased with the seemingly easy money he was making. This was less than one year before the stock went to $0 due to massive fraud and putbacks by the banks that were buying New Century's loans.
>>1385610
Fine, most people aren't getting shit.
The program your talking about is used by a limited number of brokerages, and only very high net worth individuals qualify for it. Even then, only if they have A) A long positions in a hard to borrow stock, and B) A shitload of shares in said position.
Serious traders don't have the option of using a cash account, so it sounds like they're fucked regardless.
Regarding the dividend, as the holder of the position, you receive this no matter if it's lent out or not, the only difference is who pays you.
average dividend of yield is around 3%.
If I invest when the dividend yield is 3%, wait a few years and the dividend payments increase, does that mean my effective dividend yield could be for example 20% since I purchase the stock when the price was lower?
How can someone from a shitty country, like Brazil, invest in foreign stock?
I know much more about foreign companies and stocks since I'm always on American news sites and 4chan.
I have a few things I made with basically zero relation aside from the fact that they all run on microcontrollers. What should I call my website?
>>1385711
errr, no
why on earth do you think the people lending the stocks out are getting their positions - sure aint the big brokers, prop trading is bretty much verboten in anywhere big enough to have the depth of pockets needed to cover the naked shorts. So who else - the pension funds - yep. you think they're gonna do something they aint getting paid for ? Nope. the lenders of the stock arent gonna go to the trouble of letting someone have something for free when they can get paid for it - stock loan operations in major banks and a big office.
dividend - not sure I follow you there, you get paid the dividend by the issuer, there's no way the issuer would pay the person you've lent the stock to on the "hey, idda be nice if you could just pass that on" promise that they've give it to the nominal holder.
apart from the, and the other things you've said, everything you put is crap
have a lovely day
>>1387459
>why on earth do you think the people lending the stocks out are getting their positions
I this a question? Or even a complete sentence?
>sure ain't the big brokers
The big brokers are "getting their positions"?
What in God's holy name are you blathering about?
The question was "are most people getting paid when their broker loans their long positions out to short?"
The answer is no, most people are not compensated when their positions are lent out.
I don't know what the rest of your post means.
Dividends are paid to the holder of the long position. Period.
