Musing of the Day: How The “Reddit Effect” Can Become A “Butterly Effect.” In this thread, I’m going to further explore this idea of a seemingly “one-off” curiosity in the market can have far-reaching second and third order effects — in a BAD way.

In my last musing, I explained why this all-out short-attack was actually a bad thing — not because I care about any of the hedge funds or short sellers getting hurt, but because of the ramifications it has to the broader financial system.

In short, when portfolio managers no longer feel that they can short or hedge their portfolios without getting carried out by the “Reddit/WSB” Lynch Mob, they have only one alternative — de-risk their long holdings.