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April 27th, 2010
04:11 PM ET

When short selling is good

Richard Sauer
Special to CNN

[cnn-photo-caption image=http://i2.cdn.turner.com/money/2010/04/27/news/companies/goldman_sachs_hearing/smlvid.four_swearing.gi.jpg caption="Sauer: Goldman Sachs accused of lying about its method to help client short housing market" width=300 height=169]

Pity the poor short-seller. Seriously. That much-maligned creature gets no love at the best of times, and these days are more like the worst.

This, despite the irreplaceable benefits he brings to the financial markets. Short-selling in the conventional sense involves borrowing stock, selling it and, at a later date, replacing the borrowed shares though market purchases. If, in the interim, the shares have declined in value, the short-seller prospers. If not, he doesn't.

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Filed under: 360° Radar • Economy • Richard Sauer • Wall St.