Who’s to Blame for the Rash of Short Squeezes?

by Peter C. Earle
The American Institute for Economic Research

The short squeeze in GME (GameStop) over the past few days has captured widespread public and media attention. The stock, which has traded for years in the single digits and teens, ran up to over $350 per share – a gain of $200 per share today alone, suggesting that the entities who held large short positions (bets that the stock would decline) have thrown in the towel. No one knows what the damage is, but no doubt a handful of hedge funds are hurting, having had to buy their positions back far higher than when they sold them. More details will come out over the next few weeks.

The average share price going back roughly one year is under $11. As of today’s closing price GameStop’s one-year return is 7,216%, with the last five trading days seeing a return of nearly 900%. (Having said that, the stock has remained active – hours after equity markets closed.)

Continue Reading at AIER.org…