The mental fuckery to even understand why stock markets are a thing and why they work like they do is a bit much.
So here was the issue: private investors don't have enough money to help you grow your company. So, you go to each investor and sell a % at a price that you negotiate, but businesses got tired of going door to door for investors and decided, hey why don't we create a public market where you can buy and sell % of a company as an initial investment.
Thus the stock market was created, all the investors can send off some people to go on and learn about the market instead of being courted by businesses seeking money. The business, however, only ever makes money off of the stock market once: in the initial public funding round. If they keep 51% of the stock or more that they made-up and sold at a price that is made up, they still have full control of the company and just have to invite major investors to steak dinners ever now and then.
The government steps in on this. Some businessmen got scammed with some deep pockets by this system, so they regulate it here and there to force the businesses on the market do certain things to protect big investors. Things like forcing the companies to do quarterly reports and so on.
Anyway, the Investment is in: how do you cash out? Well, you either sell it to some sucker who thinks they are buying a piece of a company, or you need to get the company to below 51% so that you can force them to do actions that make you money. Which is to say: either you give the company more money to get them below 51% or you wait for them to sell it to you to get more money. Or alternatively, the CEO decides to make their exit from the company and wants to make a ton of money for their worth. Either way, the company is now in control of major shareholders rather than the company's founders.
The major founders not begin dividing out the profit from the company as either dividends or buying it back. If they didn't do that, they would have valueless pieces of paper. The founders when times are good, might also try to buy back above the 51% to gain full control of their profits.
Now onto why shorts exist: you have a piece of paper and you want to make some money on it, so some rich guy decided, probably as a joke, to lend his piece of paper to some guy and said, bring it back to me in a week. The guy instantly sold it to a company, thinking that he could get an exact copy across the street for cheaper. Bought it up, and brought it back, making some money. The first guy realized this and started charging money on this operation.
Elon hates shorts more than most, given that Tesla is the most shorted stock of our generation. The dude lives to squeeze the Tesla shorts.
The mental fuckery to even understand why stock markets are a thing and why they work like they do is a bit much.
So here was the issue: private investors don't have enough money to help you grow your company. So, you go to each investor and sell a % at a price that you negotiate, but businesses got tired of going door to door for investors and decided, hey why don't we create a public market where you can buy and sell % of a company as an initial investment.
Thus the stock market was created, all the investors can send off some people to go on and learn about the market instead of being courted by businesses seeking money. The business, however, only ever makes money off of the stock market once: in the initial public funding round. If they keep 51% of the stock or more that they made-up and sold at a price that is made up, they still have full control of the company and just have to invite major investors to steak dinners ever now and then.
The government steps in on this. Some businessmen got scammed with some deep pockets by this system, so they regulate it here and there to force the businesses on the market do certain things to protect big investors. Things like forcing the companies to do quarterly reports and so on.
Anyway, the Investment is in: how do you cash out? Well, you either sell it to some sucker who thinks they are buying a piece of a company, or you need to get the company to below 51% so that you can force them to do actions that make you money. Which is to say: either you give the company more money to get them below 51% or you wait for them to sell it to you to get more money. Or alternatively, the CEO decides to make their exit from the company and wants to make a ton of money for their worth. Either way, the company is now in control of major shareholders rather than the company's founders.
The major founders not begin dividing out the profit from the company as either dividends or buying it back. If they didn't do that, they would have valueless pieces of paper. The founders when times are good, might also try to buy back above the 51% to gain full control of their profits.
Now onto why shorts exist: you have a piece of paper and you want to make some money on it, so some rich guy decided, probably as a joke, to lend his piece of paper to some guy and said, bring it back to me in a week. The guy instantly sold it to a company, thinking that he could get an exact copy across the street for cheaper. Bought it up, and brought it back, making some money. The first guy realized this and started charging money on this operation.
Hey, this was helpful pede, thank you!