Short positions are taken when an investor believes the market in a particular security, or in securities in general, will fall for one of many reasons.
•This investor is hoping to sell high, and then, when the time is right to buy low. Once again this is the only way to make money, except in reverse order from long positions. Normally an investor buys and later sells that security, but in the case of a short sale, the investor first sells the security, then after a time the investor buys the security to replace what was borrowed. When selling short, an investor is borrowing the stock or bond from the broker/dealer, but will have to purchase and replace it at some future time. This investor is considered to be a BEARISH INVESTOR, meaning that the investor thinks the market will decline.
•Bearish investors are those who have taken a position by selling first on their security (stock, bond, or call option) and are hoping to buy low later because of a fall in its market price.