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> But, this happens both ways good and bad so it's probably a wash. Only if you ignore reality. Huge hedge funds are called market movers for a reason. These
by jml78 6y ago
> But, this happens both ways good and bad so it's probably a wash.
Only if you ignore reality. Huge hedge funds are called market movers for a reason. These hedge funds decide to short your company's stock and they have a direct impact on your stock value regardless of whether the hedge fund has any basis for actually shorting. Their "reason" can be 100% bullshit. Doesn't matter. They put a large short position on your company and it has an immediate direct impact.
Not only that, like you said about disinformation, it also allows them to get other parts of the market to also jump on board.
The way shorting works with hedge funds is that it is a self fulfilling prophecy a huge majority of the time
And people talk about how capitalism has driven companies to only care about the next quarter. Everyone realizes this is overall a bad thing. Short sellers are one of the reasons you have to do that.
I don't believe shorts have any intrinsic value they are actually bringing to the market. People choosing not to buy stock at existing prices does the same thing people claim shorting does. You don't need to borrow stock and sell it back making a profit to have a functioning trading system.
- auntienomen 6y agoThere's a fallacy in your claims. Shorting affects the owners of the stock. But publicly traded companies don't normally own a large amount of their own stock. Their stock price doesn't have that direct an effect on their balance sheets. It affects their credit worthiness, but not in a mechanistic way. (Believe me, Gamestop isn't finding it easier to borrow just because its price has gone bonkers.)
- formerly_proven 6y agoThat's also a key reason why market cap is relatively meaningless outside of the actual stock market. E.g. TSLA has a giant market cap for an automaker, but that has no real operational impact and has essentially no relation to their behavior and performance in their market.
- kgwgk 6y agoTesla raised $12bn last year issuing new shares. This is obviously related to the stock price and has an operational impact.