There’s a lot going on in the stock market this week and both and Reddit in general are inundated with questions about it. This is an opportunity to ask for explanations for concepts related to the stock market. All other questions related to the stock market will be removed and users directed here.
How does buying and selling stocks work?
What is short selling?
What is a short squeeze?
What is stock manipulation?
[What is a hedge fund?](https://www.reddit.com/r/explainlikeimfive/comments/l6ptb7/eli5_what_is_a_hedgefund/)
What other questions about the stock market do you have?
In this thread, top-level comments (direct replies to this topic) are allowed to be questions related to these topics as well as explanations. Remember to follow all other rules, and discussions unrelated to these topics will be removed.
**Please refrain as much as possible from speculating on recent and current events.** By all means, talk about what has happened, but this is not the place to talk about what will happen next, speculate about whether stocks will rise or fall, whether someone broke any particular law, and what the legal ramifications will be. Explanations should be restricted to an objective look at the mechanics behind the stock market.
EDIT: It should go without saying (but we’ll say it anyway) that any trading you do in stocks is at your own risk. **is not the appropriate place to ask for or provide advice on stock buy, selling, or trading.**
In: Economics
Imagine you have a warehouse of bikes.
Now, I have a buyer that wants to buy a bike for $300, but I think that next week there will be a big discount and I can go buy a new bike for $100. I ask you if I can borrow a bike to sell to the buyer and you agree, so long as I can replace that bike in a week. I sell your bike and wait for the next week. Sure enough, the discount kicks in, I buy a new bike, and give it to you + a small fee for borrowing it. I make money and you have your bike plus the fee. That’s a short-sell.
But what if instead nobody is selling any bikes next week? The price goes WAY up because everybody who short sold NEEDS to buy. That’s a short squeeze.
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