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There is a perception that hamsters have dealt a heavy blow to hedge funds. But is this really the case? By the latter we mean investment banks, brokers, hedge funds and of course regulators like the Fed and SEC. Yes, the funds have lost about $5-10bn. But it’s still a drop in the ocean.
S&P 500
Why did the hamsters do so well? It was the suddenness of the attack. On the one hand, no one was expecting it. On the other hand, even when the attack started, no one of the big players took it seriously.
But now the situation has completely changed. What would happen if hamsters attacked another stock? Trying to raise its price sharply, in order to knock out the funds selling these stocks without coverage?
The best answer was given by representatives of the American stock exchange Nasdaq, who said they would stop trading on any security if manipulation appeared. Naturally, by manipulation will be understood a conspiracy of hamsters to buy particular shares.
Does the stock exchange have the right to do that? That is a question for lawyers and years of litigation. Ideally, the trading rules explicitly forbid any kind of price manipulation. That is, hamsters, most likely, will not be able to accelerate the next stock at least 5-10 times, if they mount a coordinated attack. Well, if there is no overt coordination, it will not be possible to raise the price even 2 times.
So what should hamsters do? We will talk about this in detail tomorrow, in the second part of the article.
11.00 EU retail sales for December
13.00 Bank of England interest rate decision
13.00 Planned asset purchases by the Bank of England
13.30 Address by Governor of Bank of England E.Bailey
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