EconBuff Podcast #24 with Eric McKee
Dr. Eric McKee talks with me about the short squeeze with GameStop stock happened. Dr. McKee walks us through what short trading is. We discuss the details of how short squeezes happen. We explore how hedge funds work and Dr. McKee explains why hedge funds use shorts. Dr. McKee argues the confluence of zero dollar commissions, the pandemic, stimulus checks, and a little bit of good news for GameStop caused the short squeeze event. Dr. McKee elaborates on how RobinHood works and how they were likely influenced by their clearinghouse. Dr. McKee discusses why RobinHood stopped their retail investors from trading the way the investors were and explains how there could be so many GameStop shares being shorted at one time. Finally, Dr. McKee lays out how it is the Melvin Capital hedge fund could lose 4 billion dollars on a seemingly insignificant stock like GameStop and we explore how Dr. McKee views the nature of the sub culture in the r/wallstreetbets sub-reddit.
Photo by Joshua Hoehne on Unsplash
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