I’ve been trying to follow the Wall Street bets situations, but I can’t find a simple definition of hedge funds. Help?
In: Economics
Imagine you ask your mom to borrow her watch for a week. Now you tell your little sister that the watch is worth a lot of money, and she pays you a lot of money for it. A week later, you come back to your sister and tell her the price for a watch isn’t so high anymore, and ask if you could buy the watch back for a low price. Now you give the watch back to your mom, after making money off of it without really doing anything.
That’s what hedge funds do, except on a bigger scale and with stocks instead of watches. They borrow the stocks, sell them when they’re expensive, buy them back when they’re cheap, and make millions.
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