Yes, but wouldn't the dropping shorts mean increasingly people bought overvalued shares?
Increasingly people jumping onto "the ride" up, who may not sell to shorts in time and will just lose the game?
I don't think we know the short:share ratio exactly, as double borrows would be happening for <100% too, no? I think in the end, nobody knows what situation people bought into exactly and how fast this will collapse.
People who got in late, risk not getting off in time, as GME is totally overvalued right now. There will be causalities from desperate, poor folks going all in for a lack of understanding their risk and believing the WSB hype. I don't blame them for being "stupid", as a few thousand bucks plus, can change your life, if you're poor; I blame the ignorant people on WSB not educating about the very real risks involved. Tho, it's probably a good time for everyone learning how all this works and paying 100$-500$ risk for this education.
> Yes, but wouldn't the dropping shorts mean increasingly people bought overvalued shares?
That's the point. When its 100% shorted and hedge funds all need to cover, they would be the ones buying these worthless stock from sellers. If say there are 5 hedge funds right now shorting 100% (20% each), you wouldn't want to be the last one shorting cause the 80% short sellers that are covering could very well bankrupt your fund. The underlying stock value doesn't matter as long as someone else is paying for it (i.e. hedge funds).
That's why business schools always say a) don't short sell and b) don't over leverage your short sell or you will get into a short squeeze. Short selling in my personal opinion is really dumb because your upside is limited, but your downside is unlimited.
I very much suspect that this will be in the textbook in the coming years as a prime example of black swan/ short squeeze.
Increasingly people jumping onto "the ride" up, who may not sell to shorts in time and will just lose the game?
I don't think we know the short:share ratio exactly, as double borrows would be happening for <100% too, no? I think in the end, nobody knows what situation people bought into exactly and how fast this will collapse.
People who got in late, risk not getting off in time, as GME is totally overvalued right now. There will be causalities from desperate, poor folks going all in for a lack of understanding their risk and believing the WSB hype. I don't blame them for being "stupid", as a few thousand bucks plus, can change your life, if you're poor; I blame the ignorant people on WSB not educating about the very real risks involved. Tho, it's probably a good time for everyone learning how all this works and paying 100$-500$ risk for this education.