Bear raid
A bear raid is a type of stock market strategy, where a trader (or group of traders) attempts to force down the price of a stock to cover a short position. The name is derived from the common use of bear or bearish in the language of market sentiment to reflect the idea that investors expect downward price movement.[1]
A bear raid can be done by spreading negative rumors or misinformation about the target firm,[2] which puts downward pressure on the share price. This is typically considered a form of securities fraud.[citation needed] Alternatively, traders could take on large short positions themselves, manipulating the price with the large volume of selling,[3] making the strategy self-perpetuating.[citation needed]
History
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The practice of bear raid has its roots in the 17th-century Dutch Republic. In 1609, Isaac Le Maire, a sizeable shareholder of the Dutch East India Company (VOC), organized a bear raid on the stock of the company.[4]
See also
[edit | edit source]References
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