Bear raid: Difference between revisions
No edit summary |
More specific |
||
| Line 1: | Line 1: | ||
{{Short description|Stock |
{{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> |
[[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> |
||
Revision as of 16:43, 28 June 2024
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. Alternatively, traders could take on large short positions themselves, manipulating the price with the large volume of selling,[3] making the strategy self-perpetuating.
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]
See also
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.
 | This finance-related article is a stub. You can help Wikipedia by expanding it. |