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A bear raid is a type of stock market strategy, where a trader (or group of traders) attempts to force down the price of a stock to cover a short position. The name is derived from the common use of bear or bearish in the language of market sentiment to reflect the idea that investors expect downward price movement.^[1]

A bear raid can be done by spreading negative rumors or misinformation about the target firm,^[2] which puts downward pressure on the share price. This is typically considered a form of securities fraud.^{[citation needed]} Alternatively, traders could take on large short positions themselves, manipulating the price with the large volume of selling,^[3] making the strategy self-perpetuating.^{[citation needed]}

History

The practice of bear raid has its roots in the 17th-century Dutch Republic. In 1609, Isaac Le Maire, a sizeable shareholder of the Dutch East India Company (VOC), organized a bear raid on the stock of the company.^[4]

References

^ Law, Jonathan, ed. (2008). A dictionary of finance and banking (4th ed.). Oxford: Oxford University Press. ISBN 9780199229741. Retrieved 22 November 2014.
^ Malik, Andrew; Sarna, David E.Y. (2010). History of Greed Financial Fraud from Tulip Mania to Bernie Madoff. Hoboken: John Wiley & Sons. p. 62. ISBN 9780470877708. Retrieved 22 November 2014.
^ Scott, David L. (2003). Wall Street words : an A to Z guide to investment terms for today's investor (3rd ed., newly revised and updated. ed.). Boston: Houghton Mifflin. p. 28. ISBN 0618176519. Retrieved 22 November 2014.
^ Sayle, Murray (2001-04-05). "Japan goes Dutch". London Review of Books. 23 (7): 3–7. ISSN 0260-9592. Retrieved 2017-11-01. ...Dutch market punters pioneered short selling, option trading, debt-equity swaps, merchant banking, unit trusts and other speculative instruments, much as we now know them. With them came specialised offshoots – insurance, retirement funds and other orderly forms of investment – and the maladies of capitalism: the boom-bust cycle, the world's first asset-inflation bubble, the tulip mania of 1636-37, and even, in 1607, history's first bear raider, a canny shareholder named Isaac le Maire who dumped his VOC stock, forcing the price down, and then bought it back at a discount.

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[1] Law, Jonathan, ed. (2008). A dictionary of finance and banking (4th ed.). Oxford: Oxford University Press. ISBN 9780199229741. Retrieved 22 November 2014.

[2] Malik, Andrew; Sarna, David E.Y. (2010). History of Greed Financial Fraud from Tulip Mania to Bernie Madoff. Hoboken: John Wiley & Sons. p. 62. ISBN 9780470877708. Retrieved 22 November 2014.

[3] Scott, David L. (2003). Wall Street words : an A to Z guide to investment terms for today's investor (3rd ed., newly revised and updated. ed.). Boston: Houghton Mifflin. p. 28. ISBN 0618176519. Retrieved 22 November 2014.

[4] Sayle, Murray (2001-04-05). "Japan goes Dutch". London Review of Books. 23 (7): 3–7. ISSN 0260-9592. Retrieved 2017-11-01. ...Dutch market punters pioneered short selling, option trading, debt-equity swaps, merchant banking, unit trusts and other speculative instruments, much as we now know them. With them came specialised offshoots – insurance, retirement funds and other orderly forms of investment – and the maladies of capitalism: the boom-bust cycle, the world's first asset-inflation bubble, the tulip mania of 1636-37, and even, in 1607, history's first bear raider, a canny shareholder named Isaac le Maire who dumped his VOC stock, forcing the price down, and then bought it back at a discount.

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+{{Short description|Stock trading strategy}}
-A '''bear raid''' is a type of [[stock market]] strategy, where a [[Trader (finance)|trader]] (or group of traders) attempts to force down the price of a [[stock]] to cover a [[short selling|short position]]. The name is derived from the common use of
+A '''bear raid''' is a type of [[stock market]] strategy, where a [[Trader (finance)|trader]] (or group of traders) attempts to force down the price of a [[stock]] to cover a [[short selling|short position]]. The name is derived from the common use of [[Market trend|''bear'' or ''bearish'']] in the language of [[market sentiment]] to reflect the idea that investors expect [[downward]] price movement.<ref>{{cite book|editor1-last=Law|editor1-first=Jonathan|title=A dictionary of finance and banking.|date=2008|publisher=Oxford University Press|location=Oxford|isbn=9780199229741|edition=4th|url=https://books.google.com/books?id=9SaLP0be02sC&pg=PA42|accessdate=22 November 2014}}</ref>
-'bear' or ''bearish'' in the language of [[Market sentiment]] to reflect the idea that investors expect downward price movement.
-A bear raid can be done by spreading negative [[rumor]]s about the target firm, which puts downward pressure on the share price. This may be a form of [[securities fraud]]. Alternatively, traders could take on large short positions themselves, with the large volume of selling ideally causing the price to fall, making the strategy self perpetuating.
+A bear raid can be done by spreading negative [[rumor]]s or misinformation about the target firm,<ref>{{cite book|last1=Malik|first1=Andrew|last2=Sarna|first2=David E.Y.|title=History of Greed Financial Fraud from Tulip Mania to Bernie Madoff.|date=2010|publisher=John Wiley & Sons|location=Hoboken|isbn=9780470877708|page=62|url=https://books.google.com/books?id=KxMnRJ0-__UC&pg=PT62|accessdate=22 November 2014}}</ref> which puts downward pressure on the share price. This is typically considered a form of [[securities fraud]].{{Citation needed|date=August 2024}} Alternatively, traders could take on large short positions themselves, [[market manipulation|manipulating]] the price with the large volume of selling,<ref>{{cite book|last1=Scott|first1=David L.|title=Wall Street words : an A to Z guide to investment terms for today's investor|date=2003|publisher=Houghton Mifflin|location=Boston|isbn=0618176519|page=28|edition=3rd ed., newly revised and updated.|url=https://books.google.com/books?id=7hsXI8_zwoEC&pg=PA28|accessdate=22 November 2014}}</ref> making the strategy self-[[perpetuating]].{{Citation needed|date=August 2024}}
+==History==
+{{See also|Financial history of the Dutch Republic|Dutch East India Company}}
+[[File:Vereenigde Oostindische Compagnie spiegelretourschip Amsterdam replica.jpg|thumb|Replica of an [[East Indiaman]] of the [[Dutch East India Company]]/United East Indies Company (VOC)]]
+The practice of bear raid has its roots in the 17th-century [[Dutch Republic]]. In 1609, [[Isaac Le Maire]], a sizeable shareholder of the [[Dutch East India Company]] (VOC), organized a bear raid on the stock of the company.<ref>{{cite journal|author=Sayle, Murray|author-link=Murray Sayle|date=2001-04-05|title=Japan goes Dutch|url=http://www.lrb.co.uk/v23/n07/murray-sayle/japan-goes-dutch|journal=[[London Review of Books]]|volume=23|issue=7|pages=3–7|issn=0260-9592|accessdate=2017-11-01|quote=...Dutch market punters pioneered [[short selling]], [[option trading]], debt-equity swaps, [[merchant banking]], unit trusts and other speculative instruments, much as we now know them. With them came specialised offshoots – insurance, retirement funds and other orderly forms of investment – and the maladies of capitalism: the [[boom-bust cycle]], the world's first asset-inflation bubble, the [[tulip mania]] of 1636-37, and even, in 1607, history's first bear raider, a canny shareholder named [[Isaac le Maire]] who dumped his VOC stock, forcing the price down, and then bought it back at a discount.}}</ref>
 == See also ==
+* [[Short and distort]]
 * [[Uptick rule]]
-* [[Market manipulation]]
 ==References==
+{{Reflist}}
-* [http://www.wisegeek.com/what-is-a-bear-raid.htm What is a bear raid]
 [[Category:Stock market]]
 [[Category:Finance fraud]]
+[[Category:Dutch inventions]]
+{{finance-stub}}