What does it mean when they say long or short on a stock?

Answer 1

When someone buys a stock, they are said to be "long".

Its also possible to sell a stock you dont own by borrowing it from a broker. You then owe the broker the stock. Thats called being "short".

People are long a stock if they expect the value to appreciate.
But an investor will short a stock if they believe it is overvalued and will fall in price. They make money by purchasing the stock when it falls in price and giving the stock back to the broker they borrowed it from.

Answer 2

Long stock is purchased when the stock is going up or in the in the up cycle and can be traded (or purchased and sold).Short stock is purchased when the stock is on the decline (or going down from a long cycle) you can make money in either direction Long or short.I am giving you a simple answer it is much more involved than that .

Answer 3

it means you will lose a lot of money on the stock market , if you don't study up more . try subscribing to wall street journal for a few months first . long is a bet stock price will rise , short is a bet it will drop .

Answer 4

Long is when you buy the stock (you actually now own some), short is when you sell it even though you don't have any (you'll have to purchase it to fill the order when it has dropped in price, - hopefully).

Answer 5

When you go short on a stock, you're anticipating that the price of the stock will decline. If the price does go down, you make money.
This is how it works -
--The transaction is called a "short sale".
--Bill owns XYZ.
--XYZ is worth $50.
--You "borrow" 1 share of XYZ from Bill. No money changes hands. Your only obligation to Bill, is to return 1 share of XYZ.
--Ted buys your 1 share of XYZ for $50 - You now have $50 in your pocket.
--The price of the stock drops and is now worth $25.
--Joe want's to sell his stock and get rid of it.
--You buy 1 share of XYZ from Joe for $25. This transaction is called "buy to cover".
--You have $25 left in your pocket from your short sale to Ted ($50 minus $25 = $25) and you have one share of XYZ that you just bought from Joe.
--You return 1 share of XYZ to Bill who you originally borrowed it from.
--You're now $25 richer.

You don't actually borrow from Bill. You borrow shares from your broker. Your broker is holding Bill's and everyone's shares until he/they sell them. The only fee you pay, is your broker's usual transaction fee.

Here's a glossary of investor terms -
http://www.investorwords.com/