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Why shouldn't COVERED shorting be legal? (Naked shorting--selling stock you don't plan to deliver--is illegal for one very good reason: it completely hoses the market. If you sell Acme to me but don't deliver it, and then I sell the Acme I bought to Joe but I can't deliver it because you won't, and Joe sells Acme to Frank but can't deliver it because it never existed in the first place, Joe, Frank and I all get hurt; you laugh all the way to the bank.)

A covered short is a risky way to capitalize on market downturns. I couldn't ever bring myself to do it, but it's okay.

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Q: Why is short selling legal?
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