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mysteric

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does anyone care to dumb it down for me? I’m really confused as to what the entire thing is about
 

LeeHoseok

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Hedge funds short stock (borrowing shares and immediately selling), betting that it tanks so they can re-buy when it does, return the shares to the lender and make a massive profit. Reddit found out and are buying the stock, driving the price up, to try and bankrupt the hedge funds, because eat the rich. They still have to pay for the stock they borrowed, and when the price is driven up, they lose a ton of money.
 

mysteric

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Hedge funds short stock (borrowing shares and immediately selling), betting that it tanks so they can re-buy when it does, return the shares to the lender and make a massive profit. Reddit found out and are buying the stock, driving the price up, to try and bankrupt the hedge funds, because eat the rich. They still have to pay for the stock they borrowed, and when the price is driven up, they lose a ton of money.
ok I see the general gist of it
still don’t 100% get that first part but I think I got the general idea of it, ty :sanapray:
 
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ok I see the general gist of it
still don’t 100% get that first part but I think I got the general idea of it, ty :sanapray:
Shorting stock means borrowing stocks from a lender and immediately selling them, betting on the stock, for whatever reason, losing value. It then allows the (in this case) hedge fund to re-buy the stocks they sold at a lower price and return them to the lender, thus pocketing any difference in the price. If the stock goes up, they are still obligated to return what they borrowed, but they have to buy at the stock's current price. If that has gone up instead of down, they lose the difference instead of pocketing it, and there's no limit to the amount of money they can lose.
 

mysteric

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Shorting stock means borrowing stocks from a lender and immediately selling them, betting on the stock, for whatever reason, losing value. It then allows the (in this case) hedge fund to re-buy the stocks they sold at a lower price and return them to the lender, thus pocketing any difference in the price. If the stock goes up, they are still obligated to return what they borrowed, but they have to buy at the stock's current price. If that has gone up instead of down, they lose the difference instead of pocketing it, and there's no limit to the amount of money they can lose.
ohhh icic
ty for your service :sanapray:
 
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LoveYooShaSha

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I couldnt inderstand the explanation here(tho i already knew about shorting stock from long ago), but looking for a dumbed down explanation i found this part more interesting:
"...
the size of the loss Melvin Capital actually took, but noted that the company took on a $2.75 billion cash infusion from two investment banks to keep itself solvent. Gabe Plotkin, Melvin’s manager, told CNBC that speculation the hedge fund would file for bankruptcy is false.

How much money have people made?
Bear in mind that this is paper wealth (and it’s fluctuating wildly), but the trading on GameStop — by the way, on Tuesday it was the most-traded security in the world — has created about $2 billion in wealth, most of it for Cohen and the company’s two other biggest shareholders". So a failing/freefalling company made its investors ard $2B (id hardly call the short sellers "investors" more vultures-i think i learned some of this from Suits or fictional media, so if im wrong blame tv or movies. N nearly bankrupted a hedge fund(tho they denied it, still credible reports/guesses are they borrowed ard $2B to pay their "gamble" off. Otherwise the whole short-selling/Wall St house of cards will collapse. That hedge fund might stave off bankruptcy if they're lucky.
Funnily i got info from:
GameStop’s stock market explosion, explained
a game/pop culture site, maybe cos of gamestop-i thinknthis might not hv blown up so much if it had been a boring safe company like the other companys mentioned in the article. Or if similar such had happened to Toys R Us, tho it wasnt a short so muchbas a pillage.
The takeaway tho is:
"...for the layperson, the best advice probably came from the well-known games industry analyst Michael Pachter last week: Stay away."
 
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Also this:
For those like me, so many words,-maybe:
EsqYq67XAAAjEGJ.jpeg.jpg

Only imagine $2B worth of bananas, or if the apes n snakes had a barter economy watever passes for cowrie shells($2B worth of cowries -i cant even imagine how many or size; maybe a White House sized mansion or lesser or Empire State Building[2 billion is a rlly big number, i cant....]
 
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And it feeds on its self.
To mitigate the loss firms buy the stock at the new price, but that drives the price even higher. more firms try to stop the bleeding and buy driving the price higher.

And the flip side to shorting the stock is to put an option in it. This is what many of the ppl did as they were planning to drive the price up.
Say your stock is 10 bucks i think the stock is going to go up so i take an option at a price for a period of time. lets say i buy options at 12 dollars for a day at the end of the day if the price is more than that you have to sell it to me for 12 dollars, but if is is not you keep the money i paid for the option.
(you sell me this option because you can read and know big players are shorting your stock so you are trying to make some money.)

Traders play on the edges like this.

most folks buy a stock thinking it will go up and they will sell it then.. Traders are adrenalin junkies and the gotta have action.

And some folks are really pushing it by leveraging the money. ( say i have 100 dollars but i want 1000 dollars worth of stuff i borrow that money (i am betting the stock goes up) then sell the stock at the new higher price (if someone will buy it. pay back the K and keep the rest.

folks have turned crazy profits. I saw one where 50k turned into 11 million.

But there is massive risk here to as leverage buying is at the heart of the 1929 crash :)
And you still have to actually sell the stock at the price it is at to make any money. And only a moron would buy gamestop at the price it is now ) Because that price is all smoke and mirrors.
 
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