The strategy is simple: The investor borrows stock in the same amount in the same company which the investor now holds, and then sells that borrowed stock, i.e., short-sells the stock. For example, we'll take an investor who owns 100,000 shares of Google. So, what the investor does is to go to his friendly brokerage firm and "borrow" 100,000 shares of Google, which the investor then sells immediately. Folks reading this will by this time be wondering why the investor just doesn't sell the Google stock he owns now and pocket the cash, without going jumping through the hoops of short-selling the Google stock? If the investor simply sold his Google stock, then the investor would have to pay tax on the appreciation of that stock.

Source: Forbes October 29, 2017 15:45 UTC