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MDawg
MDawg
Joined: Sep 27, 2018
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January 29th, 2021 at 12:13:44 PM permalink
<<What does affect the price of a stock is massive buying to cover - this is what happened with GME, which shot its price up higher as the Reddit Kids pushed it beyond the comfort zone of the funds that were short.>>

Buying to cover definitely affects the price. Raises it.

Selling short doesn't affect it enough to guarantee success though, otherwise all anyone would do is sell short some massive position and then immediately buy to cover lower.

Compare to straight buying. If just buying were enough to raise the price then all you'd have to do is put in some massive order to buy and then sell it right afterwards at the higher price.

The reason these two parts of the equation more or less cancel out is that the amount of shares you enter the position with, are equal to the amount of shares you need to exit, and the combination of these two actions on the market should cancel out. So you need intervening events to affect / change the price of the stock, before whatever you did, buying or shorting, becomes profitable.

Also don't forget about the spread between the bid and the ask. That also prevents anyone from immediately turning a profit due to his own actions.

But yes, I agree with you, in principle, selling of any kind should lower the stock price.
I tell you itís wonderful to be here, man. I donít give a damn who wins or loses. Itís just wonderful to be here with you people.
unJon
unJon
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January 29th, 2021 at 12:18:03 PM permalink
Yup. We are back on the same page.

ETA: reportedly it was the buying by banks writing out of money calls that caused much of the price increase pressure.
The race is not always to the swift, nor the battle to the strong; but that is the way to bet.
MDawg
MDawg
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January 29th, 2021 at 12:25:51 PM permalink
Interesting.


By the way, as you probably know, one way to stop short sellers from borrowing your own shares is to keep a GTC sell order in place. While your shares have a sell order on them they cannot be lent out. The limit price could be set sky high to make sure they neither sell, nor are lent out.

And then, the other side of the coin, if you want to make money off lending out your shares, you may opt in to such a program at some brokerages, although they will pay you only for the use of some of the more scarcely available for borrowing stocks.
I tell you itís wonderful to be here, man. I donít give a damn who wins or loses. Itís just wonderful to be here with you people.
DRich
DRich
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January 29th, 2021 at 1:08:23 PM permalink
Quote: MDawg

Interesting.


By the way, as you probably know, one way to stop short sellers from borrowing your own shares is to keep a GTC sell order in place. While your shares have a sell order on them they cannot be lent out. The limit price could be set sky high to make sure they neither sell, nor are lent out.



Thank you, I did not know that.
Order from chaos
SOOPOO
SOOPOO
Joined: Aug 8, 2010
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January 29th, 2021 at 3:25:11 PM permalink
Quote: MDawg

Interesting.


By the way, as you probably know, one way to stop short sellers from borrowing your own shares is to keep a GTC sell order in place. While your shares have a sell order on them they cannot be lent out. The limit price could be set sky high to make sure they neither sell, nor are lent out.

And then, the other side of the coin, if you want to make money off lending out your shares, you may opt in to such a program at some brokerages, although they will pay you only for the use of some of the more scarcely available for borrowing stocks.



So I have a friend who does that. One stock, small cap, he owns a lot of. He is bullish on the company for the long term. Apparently he 'lends' his shares out and gets a really high % return with seemingly no risk.... I think it was 1% a month which is a lot! Remember, the only thing he is losing is liquidity. If he plans on keeping the shares for the long haul I don't see a downside.

MD.... have you ever done this lending shares to a brokerage thing? If not, why not? Other than the lack of liquidity, what are other downsides?
MDawg
MDawg
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January 29th, 2021 at 3:41:39 PM permalink
It must have been some stock for which it is difficult to borrow the shares...I don't believe AMZN or AAPL qualify - TSLA might.

I never did it, I just recall seeing the email that allowed me to opt into the program years ago.
I tell you itís wonderful to be here, man. I donít give a damn who wins or loses. Itís just wonderful to be here with you people.
SOOPOO
SOOPOO
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January 29th, 2021 at 3:45:22 PM permalink
Quote: MDawg

It must have been some stock for which it is difficult to borrow the shares...I don't believe AMZN or AAPL qualify - TSLA might.

I never did it, I just recall seeing the email that allowed me to opt into the program years ago.



I think TSLA does. I recall reading that it is often difficult to short because of a lack of people willing to 'lend' those shares. If you have a bunch that you are keeping 'forever' it might be a program for you.....

Bad day for me! I should have HODL today!
unJon
unJon
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January 29th, 2021 at 7:39:30 PM permalink
I find these threads fun and scratch my FOMO itch. Due to restrictions that my job imposes, I only invest in ETFs and mutual funds. Plenty fine and diversified, but certainly boring when there are interesting times in the market.
The race is not always to the swift, nor the battle to the strong; but that is the way to bet.
SOOPOO
SOOPOO
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January 29th, 2021 at 7:58:36 PM permalink
Quote: unJon

I find these threads fun and scratch my FOMO itch. Due to restrictions that my job imposes, I only invest in ETFs and mutual funds. Plenty fine and diversified, but certainly boring when there are interesting times in the market.



If you are permitted.... what job does not allow individual stock ownership?
unJon
unJon
Joined: Jul 1, 2018
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January 29th, 2021 at 8:08:14 PM permalink
Quote: SOOPOO

If you are permitted.... what job does not allow individual stock ownership?

Iíll PM you. Itís permitted with heavy restrictions.
The race is not always to the swift, nor the battle to the strong; but that is the way to bet.

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