06-17-2021, 06:13 PM
In a market collapse/bear market scenario, how are impacted heavily shorted stocks?
<!-- SC_OFF --><div class="md"><p>I was discussing this topic also on another sub and i'm curious on how investors more experienced than me see this scenario. Since a possible bear market is in sight, how should perform heavily shorted stocks ? I'm obviously referring to the well known "meme" stocks but also to many other stocks that are for many reasons heavily shorted (so i'm taking in to account also , let me say, "undervalued" stocks and not just insanely overbought tickers). My guess is that if the collateral goes down, short sellers will likely close a dangerous short position to not get margin called (consider also the heavy leverage that many funds use), rising the price of the stocks (at least in the short term) - After the short closed, then the stock should follow the downtrend. Is this realistic or i'm completely wrong?or I'm missing something important?</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/vargrevolution"> /u/vargrevolution </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/o1g2za/in_a_market_collapsebear_market_scenario_how_are/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/o1g2za/in_a_market_collapsebear_market_scenario_how_are/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>I was discussing this topic also on another sub and i'm curious on how investors more experienced than me see this scenario. Since a possible bear market is in sight, how should perform heavily shorted stocks ? I'm obviously referring to the well known "meme" stocks but also to many other stocks that are for many reasons heavily shorted (so i'm taking in to account also , let me say, "undervalued" stocks and not just insanely overbought tickers). My guess is that if the collateral goes down, short sellers will likely close a dangerous short position to not get margin called (consider also the heavy leverage that many funds use), rising the price of the stocks (at least in the short term) - After the short closed, then the stock should follow the downtrend. Is this realistic or i'm completely wrong?or I'm missing something important?</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/vargrevolution"> /u/vargrevolution </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/o1g2za/in_a_market_collapsebear_market_scenario_how_are/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/o1g2za/in_a_market_collapsebear_market_scenario_how_are/">[comments]</a></span>Kind Regards R