Re:Wall Street was the real winner of the GameStop saga
by SilasX on Monday February 07, 2022 @01:00PM
(#30248511)
The parent's point was that it does matter if it was sold by someone who had never secured a share of their own to sell in the first place, which puts artificial pressure on prices.
(And before someone jumps in to give me the speech about how the future of civilization depends on market makers being able to fabricate shares long enough to cover: Yes, I know about the exception that permits this. The purpose of my comment was just to clarify what the argument was and that the parent of this comment was not replying to it.)
Re:Wall Street was the real winner of the GameStop saga
by WJW on Monday February 07, 2022 @01:41PM
(#30249097)
It does put (a little) pressure on prices, sure. Borrowing money to buy stocks puts a little extra upward pressure on prices. But neither is illegal, neither brings guaranteed profits (naked shorting is regulated so much exactly because of the risks to unrelated market participants if the stock goes up) and neither has the capability to directly harm the underlying company.
A short seller making a bet that a stock goes down by selling the stock is simply the same (but in reverse) as someone betting the stock will go up by buying a stock. The underlying business is not affected at all.