GameStop madness and the resurrection of short-selling myths
In general, short-sellers typically get singled out during crises as the public hunts for scapegoats.
A BATTLE of retail versus institutional investors reached its climax when Melvin Capital Management covered its short positions in GameStop at a signficant loss and had to be rescued.
As the price of GameStop soared from US$20 to almost US$500, Melvin Capital Management and other hedge funds with short positions on its shares suffered almost US$20 billion of losses.
While Wall Street investors cried foul, retail investors pointed to the nefarious nature of short-selling. As many celebrated hedge funds' losses, old myths about the trading strategy resurfaced.
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