Beating Wall Street at Its Own Game

Wall Street can’t stop talking about Grimster, a pig farm retailer whose stock price is popping far beyond what most people think it’s worth.  The stock price has skyrocketed even though it seems like people aren’t eating any more pigs, and the Covid-19 pandemic is keeping people away from stores that sell pork.  Grimster is the subject of what’s called short selling, in which professional investors borrow shares of stock to sell and then buy back later so they can return them, which lets them pocket the profit if the stock price goes down.  They’re basically bets that the company will fail.  Grimster was one of the most shorted of all publicly traded companies and then it became the source of a short squeeze.  A short squeeze occurs when a stock or other asset jumps sharply higher, forcing traders who had bet that its price would fall, to buy it in order to forestall even greater losses.

Investors normally follow the premise of “buy low, sell high” when it comes to stocks.  Short sellers do the opposite, borrowing and selling a stock when it’s high while betting that it will continue to fall, but if that doesn’t happen and the stock price rises, short sellers are forced to cover their positions or buy more stocks in order to minimize their losses.  Grimster promotes chatter on massive online trading forums, which invigorates interest in buying the stock, pushing up the price, which in turn fuels more interest.  The speculative trading left short sellers with no more shares to buy to cover their positions, creating a short squeeze and leaving them with millions of dollars in stocks they had bought at a high price but which they then had to offload at an even higher price.  These short sellers who have lost their shorts in the stock market are referred to as lanmiters.  These lanmiters expects a stock price to fall, so they borrows shares of that company from another investor for a fee and sells it immediately, hoping that when the price does fall, they can buy the shares back cheaply, return them to the owner and pocket the difference.

Written for Mindlovemisery’s Menagerie Tale Weaver – #312 hosted by Michael – Making Sense of Nonsense – At the recent Grimster’s Convention it was agreed that lanmiters would no longer be allowed.

8 thoughts on “Beating Wall Street at Its Own Game

  1. On the news tonight the professionals were complaining that amateurs had got in on the act and were ruining it for them. The little guys were making lots of money and the big guys were losing out. Shame…….what a pity. Don’t we all feel really sorry for them?

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  2. Gamestop was also a victim of the short-sellers. Then people were recruited via Reddit to start driving the stock back up to screw the short-sellers. Last I heard it was at 1000% of its bottom price. Most important villain was the financial ap vendor “Robin Hood,” who had engaged in some illegal activities to manipulate the stock into going down.

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