Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open.

Why does short selling require borrowing?
In order to compare the two, you need to compare your entire portfolio, which is not just how much money you have, but how much stock. In both scenarios, you start with (at least, but let's assume) £20 and 0 stock. In your scenario, you buy 10 shares, leaving you with £0 and 10 shares. You then sell it at £1.50/share to cut your losses, leaving you with £15 and 0 shares. That concludes the first transaction with a net loss of £5. In a second transaction, you then buy 10 shares again at £1/share, leaving you with £5 and 10 shares. You are still down £15 from the start, but you also still have 10 shares. Any further profit or loss depends on what you can get for those 10 shares in the future. In a short sale, you borrow 10 shares and sell them, leaving you with £40 (your initial £20 plus what you just made on the short sale) and -10 shares of stock. At the end of the contract, you must buy 10 shares to return them; you are able to do so at £1.50/share, leaving you with £25 and 0 shares. At this point, your exposure to the stock is complete, and you have a net gain of £5.