Quote:
Originally Posted by Kiran403
As the squeeze tightens over the next week or so, it will important to monitor how much investors, especially institutional investors, will have to pay to buy back the shares. If the price keeps going or even holds steady, big funds may have to draw down on long positions in other stocks to cover their shorts if they don't have available cash. This could potentially provoke a sell-off on the market.
For me personally, I'm going to look at trimming some of my bigger positions on other stocks in advance of this to reduce this. This will also create a larger cash position to buy stocks at a discount if they drop.
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I don't see the exposure being that pervasive (ie. not every hedge fund was shorting GameStop). Worse case scenario the hedge funds that do have to cover their positions become insolvent and the fund collapses resulting in the fund liquidating all of their holdings - I believe Melvin was at $12B so thats $12B erased out of a $50 trillion dollar US stock market which isn't even a blip really.