4 ms·
you believe markets are rational. they are not. if the hedge funds that messed up unload shares of other companies they own to eventually cover, this could easi
by rantwasp 6y ago
you believe markets are rational. they are not. if the hedge funds that messed up unload shares of other companies they own to eventually cover, this could easily escalate via a positive feedback loop collapsing the whole market (the fact that we’re in a market that ignores fundamentals is also not helping).
so the fed just just force the hedge funds to cover in a controller way (ie you’re no longer allowed to short, you have 3 months to cover or you’re gone)
- mathattack 6y agoNot arguing rationality. Just arguing that it’s too small for the Fed to care. 14 billion on one stock doesn’t tank the market. Tesla or Apple can move the market that much on one earnings announcement.
- rantwasp 6y agoit’s not this one stock. it’s the volatility and the unintended consequences these can trigger