> Over several years, these short trades drove down the price of GME shares to ~$4 per share.
People keep saying this, but I just don't see how this would work in the real world.
NOTE: I am not a financial professional, what follows is my meager understanding. Please feel free to correct me with facts and information.
Here's how it COULD work, but DID NOT work: Hedge funds short so much stock, SO QUICKLY that the increase in virtual inventory drives the share price down. Here's why it DID NOT work that way: The hedge funds did not actually do this. They kept their short position open expecting GME to go to 0.
In fact, if hedge funds DID attempt this, it would certainly be market manipulation, which is something the SEC definitely watches for, especially when large players do it.
People keep saying things like predatory shorts drove the price down. As far as I can tell, these hedge funds told a story about why they though GME would go bankrupt. In turn, someone started a story about how this particular trade by these particular hedge funds was EVIL, which is just zany to me.
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I do think that Hedge Funds and Traders accumulate too much money for themselves. I don't think the GME trade is a particularly good way to fix this. There are plenty of other Hedge Funds out there.
Right, I would need some strong evidence to believe that actually happened in this case. In the linked case it was a VERY low value stock aka Penny Stock, aka OTC (over the counter, as opposed to a listed stock as in listed on a stock exchange), and the SEC DID take action against the guy. In the case of listed stocks, there is a lot more attention and regulation built into the system.
People keep saying this, but I just don't see how this would work in the real world.
NOTE: I am not a financial professional, what follows is my meager understanding. Please feel free to correct me with facts and information.
Here's how it COULD work, but DID NOT work: Hedge funds short so much stock, SO QUICKLY that the increase in virtual inventory drives the share price down. Here's why it DID NOT work that way: The hedge funds did not actually do this. They kept their short position open expecting GME to go to 0.
In fact, if hedge funds DID attempt this, it would certainly be market manipulation, which is something the SEC definitely watches for, especially when large players do it.
People keep saying things like predatory shorts drove the price down. As far as I can tell, these hedge funds told a story about why they though GME would go bankrupt. In turn, someone started a story about how this particular trade by these particular hedge funds was EVIL, which is just zany to me.
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I do think that Hedge Funds and Traders accumulate too much money for themselves. I don't think the GME trade is a particularly good way to fix this. There are plenty of other Hedge Funds out there.