Feb 10, 2021
With the GameStop incident further escalating we have been getting more questions about the whole situation. So we dedicated this episode to reviewing some of the specific areas related to short a squeeze. In today’s episode Grant dives into how short squeezes work, the controversy around Robinhood’s decision to suspend trading activities, the impact short selling has on our market, whether short selling should be banned, and more.
[02:24] The Market in the Last Week – Grant reviews the recent events related to GameStop stocks and how the incident created interest in the investment community about short selling.
[04:38] Short Squeeze – How short squeezes are created, and why short squeeze situations come with the risk of unlimited loss.
[10:45] Short Selling – How short selling works, the parties involved in short selling, and the role brokers play in short selling.
[17:40] Lending Shares – How lending shares leads to situations where there could be more shares short than shares exist in the market.
[23:39] Margin – Going on margin allows you to buy stocks worth more than the money you have. But it also can add fuel to the fire in short squeezes. Grant dives into how it happens and what you should keep in mind about going on margin.
[28:05] Robinhood’s Trading Suspension – Amidst the chaos created by the GameStop incident, the stock trading platform Robinhood suspended buying shares. Grant shares his take on the legitimacy of this practice and the purpose of doing it.
[31:28] Should Short Selling be Allowed? – Grant shares his take on the debate around whether we should get rid of short selling.
Resources:
Episode 63 - GameStop, Gamma Vortex, and Confirmation Bias podcasts.apple.com/lk/podcast/gamestop-gamma-vortex-and-confirmation-bias/id1489821030?i=1000507563780
My Take On Short Selling: abovethecanopy.us/my-take-on-short-selling/