How on 🌎 is "shorting" legal?

With all the brouhaha about "r/wallstreetbets" taking on hedge funds and sending the GameStop stock price through the roof, I thought it was high time for me to wrap my skull around what short-selling in the stock market actually is. And after many Google searches and YouTube rabbit holes, I think I got the gist of it 🙏🏾.

And all I can say is, "How the hell is this legal?"

Short-selling aka shorting is basically the act of borrowing stock and selling it as though it's yours with the assumption that it'll go down in value in the near future. And then if it drops in value like you hoped, you can take the money you made from selling it, and use some of it to buy back the stock. (You'll only need some of the money you made from the initial sale because the stock is now going for cheaper than when you first sold it). Finally, you return the stock you just bought back to its owner while pocketing the difference between what you sold the BORROWED stock for initially, and what it cost you to buy it back.

HWAT?

For the sake of illustration, let's suppose I live in Manhattan, where property values are ostensibly dropping due to the pandemic's effect on NYC. If my neighbor heads to Europe for the summer and asks me to house sit the apartment he owns for 3 months, I can't sell the house on Day 1 in hopes of buying it back for cheaper on Day 90, and then vacate the property on the day he returns while pocketing the extra money. I DON'T OWN THE PLACE. I can't legally sell something I don't have title to. No one can (at least in the real world).

So why is it permissible in the financial markets? If you know, drop me a line at vikram@ghostmile.com. I'd love to hear all about it 🍿!

[Yeah, I know what you're thinking. "It's the information age, just Google the answer!" Fair point...but this is a blog post, not an article that's actually researched and fact-checked. I write what I want with minimal effort placed into trivial items like statistics and evidence 😤. You want data points? Go read Nate Silver 🤓😉!]