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I didn't say there is such a law. I'm just saying it's not a case of "two sides disagreed on the true value of the company". It's not so symmetric. One side w
by sltkr 6y ago
I didn't say there is such a law. I'm just saying it's not a case of
"two sides disagreed on the true value of the company". It's not so symmetric.
One side was selling short because they believed (not unreasonably) that GameStop's core business is in trouble and is likely to go bankrupt (or at least more likely to lose value than gain it).
The other side was buying long not because they believed GameStop was likely to reinvent itself, but only because they noticed a lot of funds had sold it short and saw a short squeeze coming. They wouldn't have bought at the current stock price if the other guys hadn't sold short.