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My father likes to relate how risky the stock market is by saying that the same shares of stock are being sold over and over again, and that some day those shares are going to have to be repaid to the original owners.

As an example, he use a grocery store. If the grocer runs out of peas, he goes to another grocer and borrows 10 cans of peas which he takes back to his store and sells. At some point, he will have to return those peas to the grocer from which he borrowed them. If peas happen to cost more to replace when the time comes to repay, he will have lost money on the transaction.

Could someone please clarify this for me? Does it really work this way? Can 1 million shares of Company X really be traded if only 300,000 actual shares exist?

I appreciate any help you can offer.


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