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Out of context: Reply #316

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  • sarahfailin1

    monnom, sounds like w/ regard to bonds you're talking about convertible bonds? that can be converted to stocks if the price rises? Send me a link to whatever you're talking about please cause I'm confused.

    And it seems like you're saying that hedge funds shorting 140% of the stock was some sort of market manipulation. But this is completely legit as the shares are shorted (sold), bought, and shorted again. Keep in mind every share sold is also one bought by someone else, and it's only the imbalance of supply/demand that cause the price to move lower/higher.

    Shareprice might reflect the financial health of a company, because investors have taken the company's financial health into consideration in valuing the stock, BUT it doesn't control the financial health of the company. https://finance.zacks.com/stock-…

    Most companies don't authorize new share issuances regularly. The trend in recent years is actually to buy stocks back with profits rather than sell new shares to raise capital. I'd be very concerned if a company's health was dependent on its ability to issue and sell shares (which of course drives the price down).

    If you think that the hedge funds were doing something illegitimate by shorting GS, I'd like to know what that is. I haven't heard a good argument for it.

    sarahfailin 1Permalink
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    • shorting a stock was a way of recognizing the company's shitshow performance, closing 500 stores, losing nearly half of revenue, and most business in 2 yearsmonospaced
    • this is one example, but by no means the only way equity might finance debt.
      https://www.investop…      monNom
    • my issue is that that 140% appears to be the result of naked shorts. IE, the market maker (hedge fund) has sold a share it doesn't have...monNom
    • because being market makers, they can do that to increase transaction speed, and liquidity. That should be momentary and self-extinguishing. Not the case here.monNom
    • Thus, instead of a clean unwind, you end up with what's happening now.monNom
    • I think I get what you're saying. But if I short a stock and sell it, what's to keep the next guy from doing what he wants with it?sarahfailin
    • here's an explainer of how you get to 140% 'float' with short selling. Nothing nefarious, but admittedly risky for those involved.sarahfailin
    • https://www.tradersi…sarahfailin
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