Bearish investors are still holding on despite widespread stock growth and recovery, and are even raising their short stakes and betting even more money that stocks like GameStop and AMC will fall along with the wider market. This means that these investors are still betting on a decline of these stocks, even though they have suffered major blows to their growth. Let’s take a look at how bearish investors see future price developments.
Why it matters
Some shares jumped hundreds of percent in a matter of weeks earlier this year. Hedge funds thus suffered a blow and then tried to reduce the risk and balance their positions. According to Goldman Sachs, there has been a reduction in leverage since February 2009.
What you can hear
It can be heard from large investors that they had to lower the price of their shares, otherwise they would not get out of such trades and cope with losses. It is important to withstand such a psychological onslaught. The companies, which were announced through special acquisition vehicles (SPACs), more than tripled their value at the beginning of the year, rising to approximately $ 2.7 billion from $ 724 million. Thus, bearish investors have increased their bets.
What it could mean
It is not just SPACs that bearish investors are targeting (especially hedge funds). Increasingly, they are also betting that broader indices (S&P 500, Nasdaq or Russell 3000) will fall. Short-term S&P bets rose 10.2% from the end of 2020 to March 15, hitting a recent high of $ 521.1 billion.
What you can do
Investing can often be tricky and it does not have to be always in the field of digital currencies. But it is also a good way to protect your money. If you would like to learn more about investing, you can follow our Platon Trading Academy, which will provide you with everything you need to know to invest. Just remember golden rule of investing: invest only as much as you can afford to lose.