任意売却 is a process in which the investor earns from the decline in the price of the goods he or she deals in. Short sale, also termed as going short, in finance is a business method in which the investors is intuitive about the decline in prices of his dealings, which may be stock, or oil, or currency, borrows them from a broker and sells them first. Then, after a stated number of days he has to buy back the stocks, making a profit if his or her intuition was correct. The assets in this case must be fungible, that is, any unit of the commodity can be replaced by any other at any time for example currency, crude oil, government bond. Short sale is a highly controversial and also pretty old method of business, with varying opinions about it. It is banned in many countries depending upon their economic condition.
Naked short sale is a slightly different variation of short sale. It is a method in which the investor sells the goods prior to borrowing them from the broker. This method is used in various cases, for example, when the stock supply is very low, or the lenders remain unavailable, or the borrowing cost is too high. However several conducted researches on this naked short sale prove that the lending costs increase rapidly due to greater practice of this business method. Economic crisis in massive economic power of Europe, Germany, forced a ban on naked shorting. Later other countries like France, South Korea, and Italy followed suit, due to similar reasons. In Singapore, penalties were imposed on people indulging in naked shorting to curb down this practice.
任意売却 is not accepted as a risk-free business strategy. Its reasons are that there is no scope for interest in it or dividend from it. The group of people supporting short sale say that this method is very useful in realising the actual price of commodities. Interest in short sale is also a clear indication of the poor health of the stock market in the country. The richest man on the planet, Warren Buffet is a supporter of this practice. Imposing bans on this market strategy is not a very useful decision when building a dynamic, modern market is on one’s mind. In spite of these reasons, short sellers have always been the subject of several critics, and have also been engaged in legal fights. It is also a very popular and widespread business method.