i'm trying to understand the who loses when stocks are shorted... first of all, I understand that in order for one to be able to short a stock... the brokerage firm has to be able to allow you short the stock first of all. So this must mean that the brokerage firm has purchased the stock from the market at one time. so as I understand it, when you short a stock, you are practically buying the stock from the brokerage firm at the current price and when the market prices starts to fall... you then sell back the stock to the brokerage firm at the current price. So basically, the brokerage firm still holds the stock but has lost money on it and those losses has transferred into your account. Is this correct? Then if so, wouldn't brokerage firms only hold shortable stocks that they plan to make profit in the long run. And wouldn't this also mean that a brokerage firm would never want to hold any shortable stocks that they feel won't ever be profitable? If this is the case, wouldn't this mean you can guage the likelyhood profit potential of a stock depending if a brokerage firm has it available for shorting?