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Redditors vs the hedge funds

NoXion

Craicy the Squirrel
How will you have to pay from the tug of war over a computer game retailer between day traders and hedge funds?

They might tighten the regulations concerning buying stocks. But since chilango doesn't strike me as the type to buy stocks, I too am at a loss to figure out the source of his pessimism.
 
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I'm lost with this - if the redditors decide they can afford the losses and so just don't sell then when do the hedge funds lose out of it?

good guy/bad guy be fucked, if this is small investors trying to fuck over hedge funds I'm tempted to throw in some cash to help. Have never invested but seems a good starting point assuming you're going to throw away anything you put in.
 
and as soon as the hedge funds realize it's a 'thing' they'll be in there with their instant trading software so they can profit from it :(
 
I'm lost with this - if the redditors decide they can afford the losses and so just don't sell then when do the hedge funds lose out of it?

The hedge funds have a short position, meaning they've already sold shares they didn't actually own, shares they are obliged to buy and return to the owner at some later date. If they are forced to buy the shares at a higher price than they sold them for, they end up out of pocket.

It's quite tricky to understand short selling, not because it's complicated but because it's too absurd to be real.
 
ta - so they agree to buy at a particular date? Six months, a year? No way to know when that is exactly though?
 
I'm lost with this - if the redditors decide they can afford the losses and so just don't sell then when do the hedge funds lose out of it?

good guy/bad guy be fucked, if this is small investors trying to fuck over hedge funds I'm tempted to throw in some cash to help. Have never invested but seems a good starting point assuming you're going to throw away anything you put in.
It's a little complex to explain. It's called a short squeeze. So the hedge fund borrow the shares with the intention of paying for them in the future at a much lower price. In this case the hedge funds bought huge "short" positions on loan. As the value of the share price goes up, they are forced to buy shares at the new high price... further pushing up the price - a viscous circle for them.

E2a - didn't see SpookyFrank reply...
 
It's quite tricky to understand short selling, not because it's complicated but because it's too absurd to be real.
There are legitimate and sensible uses for an active "futures" market - but now the majority of it is super high stakes gambling by hedge funds.
 
There are legitimate and sensible uses for an active "futures" market

Yes if for example you can in some way guarantee a price for suppliers to produce vegetables at a reasonable selling price next year. But any examples for this sort of short buying?
 
Except these "fascists" are mainly young people with minimal savings, no pensions and big mortgages (or even just rent) big student loans, goofing around and making/losing money.

most of the ones I see post on reddit started investments with more than $10k, some with over $100k so it's not really people with little capital, although there will be a bunch of people who have gone in with a few hundred or low thousands of dollars.
 
Yes if for example you can in some way guarantee a price for suppliers to produce vegetables at a reasonable selling price next year. But any examples for this sort of short buying?
I suppose an active "call" market (buying projected gains) can only really work if there is an active "put" market (shorting/losses).
 
It's just pump and dump, isn't it? With a social media angle.

semantically no.
pump and dump is when someone who owns shares acts to pump up the price then sells it to buyers who see the artificially raising prices, then when prices start to fall those buyers have no-one to sell to, causing a crash.

In this case there are short sellers who have to buy shares at whatever price it is because of commitments they've previously made, and their need to rebuy those shares pushes up the price because the buyers of those shares are refusing to sell at a lower price.

Similar kind of effect but not the same thing
 
Yes if for example you can in some way guarantee a price for suppliers to produce vegetables at a reasonable selling price next year. But any examples for this sort of short buying?
I've never really understood the sort of moral objection to short selling. Within a capitalist market, anyway.
 
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semantically no.
pump and dump is when someone who owns shares acts to pump up the price then sells it to buyers who see the artificially raising prices, then when prices start to fall those buyers have no-one to sell to, causing a crash.

In this case there are short sellers who have to buy shares at whatever price it is because of commitments they've previously made, and their need to rebuy those shares pushes up the price because the buyers of those shares are refusing to sell at a lower price.

Similar kind of effect but not the same thing
Yeah, this is a fair point.
 
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