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  • Writer's pictureMark Monfort

Short, Longs and a world full of systems

When it comes to the Reddit/Robinhood/Gamestop frenzy, one of the things being missed by discussions amongst amateur/newer investors is how the potential restrictions to shorting stocks could lead to negative downstream consequences. Whether by regulatory or tactical change, hedge funds may be forced to change their investing styles to avoid being short squeezed

Giving fund managers the ability to short stocks enables better risk management. Limiting that capability means that cash that would normally be deployed is left out of the markets and whatever investments are being made will have a different risk profile as there’s no downside arbiter.

This affects pension funds in the US and ultimately, the average US citizen whether or not they’re a retail trader themselves (although the irony would be crazy).

Markets need buyers and sellers. You can’t just buy if there is no one selling and you can’t sell out and realise your gains if there’s no one to buy the stock. The world is full of systems and whilst we might only see cause and effect in our own little vacuums, a step back can be enlightening.

Whether it's trying to understand the impacts of changes across different departments in your ocmpany or how changes going on in the environment and the impact of sustainability will effect your business and product flows, you need to understand these things from a systems perspective.

A good way to do this is through understanding how well information flows (or doesn't) in your business so if you're interested in having a review of that then feel free to get in touch with us today.

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