Well, with betting on companies, people want a way to bet AGAINST them. That’s what shorting is. Instead of buying a stock for market price and sitting on it, shorting is effectively borrowing a stock and immediately selling it, with the promise that you will deliver X shares of that stock to the brokerage you borrowed it from in the future. Now, if you borrowed two shares of Tootsie Roll which you immediately sold for 50 bucks apiece, and then Tootsie Roll went absolutely ass up and the stock price later dropped to 25 dollars, when it came time to buy the 2 shares you owed, you could buy them for less than you originally sold them. It would cost 50 bucks to buy the shares you owed, a.k.a. “closing your short position,” and you’d be up a cool 50 bucks from the original sale. This is a SUCCESSFUL short.
Shorts are much less popular than traditional, or “long” trading, as they well should be, because of one other unique wrinkle. When you’re buying long, you can only lose as much money as you invest, since the lowest a stock can go is, well, zero. When you’re shorting stocks, however, you don’t have the safety of a mathematical floor of zero, since, in theory, there is no actual ceiling on how high any stock can go. This also means there is no actual cap on how much money you could potentially lose by shorting. If those 2 shares of Tootsie Roll you sold for 50 each are now trading at 1 million dollars a piece, (huge year for Tootsie Roll) you are on the line for 2 million dollars.