It helps to add some method to what some might call madness. Leveraged trading is basically betting with more money than you actually have, whilst short selling essentially means selling shares that you don’t actually own. To achieve glitzy returns, hedge funds have a number of plays in their book – among them, the most familiar to most would be leveraged trading and by short selling. Hedge funds make high risk bets for wealthy investors. To get to the nub of ‘de-grossing’ and give insight to impact that has on share prices, let’s take a quick step back. The phrase has been used a lot in the wake of the Reddit ‘short-squeeze’ on GameStop stock, so a fuller explanation is warranted. Hedge funds are gross, that much is the common knowledge, but, what does it mean when someone says a hedge fund is ‘de-grossing’?
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