conversation: User (probassangler31): "Just curious about this. So when an investor who is bearish on stock of ABC company, and wants to sell short 10 shares. So he goes out on the market, finds someone who will lend them 10 shares of ABC, then sells these 10 shares in the open market to someone else at the current price. Then, say 2 weeks later, when shares of ABC have gone down 10%, he buys 10 shares at this lower price (compared to what the shares originally were worth), then gives them back to the guy who lent him the 10 shares in the first place.\n\nMy question is as follows. Why would someone who owns shares lend them to someone else? If the stock goes down in value, or if it goes up in value, either way, once that lender gets the stock back, it will be the same net effect. If someone approached me and said they wanted to short my stock, I'd rather just hold on to it (if I think it'll go up in value, or sell it outright, if i think it'll go down in value).\n\nWhy would an investor, then, lend someone a stock to sell short? Does the lender get some sort of commission, or premium, or up front cash to help offset the risk?"
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