Short selling in Islamic finance

Access to Islamic Hedge Funds: November 2008

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Today short selling is one of the most popular techniques used by hedge funds to protect and, hopefully, increase their investors’ money. The majority of shorting is a way to ‘hedge’ a long position on a particular stock.

The idea is that a short seller can profit from a stock price going down by borrowing a security and selling it, expecting it will be cheaper to repurchase at some point in the future. When the seller believes the time is right, or when the lender recalls the shares, the seller