Thursday, January 28, 2021
Academic Finance Destroys Yet More Capital — Brian Romanchuk
The recent equity market shenanigans has confirmed one of my biases: modern academic finance has been very good at destroying capital. If one were of a conspiratorial bent, one might guess that finance faculties were being secretly backed by the enemies of capitalism. (I have been currently watching a documentary series on secret societies, and such misdirection is not unprecedented.) The simultaneous advocacy of efficient markets as well as the ability of hedge funds to continuously outperform created the backdrop for short squeezes that even gamers can participate in.…
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2 comments:
Your bank can always pull your credit line... when they do you have to liquidate... happens all the time...
We have at least a small credit contraction going on (banks just reduced equity/capital by about $100B to fund share repurchases) so the higher leveraged positions are going to be looked at first for liquidation..
138% of float short sounds pretty leveraged... probably first to get trimmed back...
Have to see if this is going to get worse or stabilize here...
Yellen on the rack:
https://twitter.com/ColumbiaBugle/status/1354882529107406850?s=20
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