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Hear some people saying that what WSB is doing is wrong, and that they deserve to lose their money. Interestingly, they don't seem to think hedge funds betting >100% of a company is wrong, nor do they think they should lose all their money.
The market is either free or not.
The market is either free or not.
If people betting on a short squeeze lose all their money, then they should lose all their money. That's the bet they make. They must live with it. Same goes for hedge funds (and all their investors). If they want to take obscene risk, let them suffer the consequences of failure
Now as risk starts shifting up the chain to clearing houses and possibly brokerage firms, this is something that they should have under control. Leverage and margin seems to be the amplifying effect that shifts some risk to these OTHER institutions. But so what?
They have a job to do, and if their model doesn't work in extreme scenarios, then the model doesn't work and must be scrapped. The idea that short sellers performs an essential function is a fallacy and it especially breaks down when you limit players risk like this.
And by 'limit players risk', what I mean by that is, limit 1 side (the short side) at the expense of the long side.
This should be a free market, and should be allowed to play out to it's conclusion. Some people WILL lose money. That's the point!
This should be a free market, and should be allowed to play out to it's conclusion. Some people WILL lose money. That's the point!
