I don't understand what it means to "Sell" stock that you don't already own, can someone explain the intuition behind it?

Question

I started a couple months ago to learn more about the stock market and financial education in general, but this particular concept was hard to wrap my head around.

I understand there are bears and bulls behaviors in the stock market, but when I go and sell a stock, how can I sell it if I don't own any of that stock already?

I can understand if I go around the block, find someone selling shoes for 10$, I buy them, then I go two blocks down the street and find someone wanting shoes for 12$, I can make a profit by Selling to him.

But if I reach the guy that wants shoes, how can I "Sell" something I don't own yet?

Answer 1

But if I reach the guy that wants shoes, how can I "Sell" something I don't own yet?

Going with your scenario, you borrow the shoes from someone and sell them to the "guy who wants the shoes". But you owe that exact pair of shoes to the person who loaned them to you.

Short selling is the sale of a security not owned by the seller. If available, your broker borrows them from someone who owns the stock. In simple numbers, this effectively creates two owners of the same 100 shares (+100 and +100) with the short seller having the opposite obligation ( -100) which nets out to the original +100 shares owned if no shorting was involved.