Hedge funds intro | Finance & Capital Markets | Khan Academy

This is financial advice and I never give financial advice: DONT LEAVE DURING THE BEAR. If you don’t want to invest…learn. If you don’t want to learn…build. If you don’t want to build observe. DO SOMETHING…other than leave. There is so much opportunity here. Take advantage!

Lol ASD

The word was "incentivized".

Haha, he said doo doo...

If they so secretive, how you know the sources of the info presented🤔

NOT Financial ADVICE
For all of the new baby apes. I know a lot of you have questions, and I thought it would be helpful to provide you with some overall context to understand the significance of the movement you just joined.
Here’s the cliff note version. Covid hit last March and a couple of big hedge funds concocted a plan to drive AMC into bankruptcy by “shorting” it and make a ton of money in the process.

You “short” a company when you think the value of the stock is going to go down. When the country locked down and AMC closed their doors and their revenue literally went to $0 overnight, it was a no brainer play for the hedge funds.
So they started borrowing millions and millions of shares from brokers and sold them “short” at the market price at the time, and they pocketed the cash from the sale. The idea is that the stock price will drop, you can buy them back later at a lower price, and then return the borrowed shares to the broker and keep the difference. If the company goes bankrupt, the stock goes to $0 and they don’t have to buy anything back at all and keep everything. This is what they were banking on. They’ve done this to company after company over the years, and they saw this as a sure thing as any.

Well a bunch of people on Reddit (affectionately known as “Apes”) noticed they were trying to drive AMC, GameStop and many other retail and mortar stores into bankruptcy, and banded together to buy up all the available shares, driving up the share price. This resulted in the mini squeeze in January. But Apes didnt sell after that. And the hedge funds didn’t cover their short positions either (I.e. buy back the millions of shares they had borrowed and sold short).

The Apes kept buying and buying, and holding and holding, and once the real shares were all bought up, the hedge funds doubled, tripled and quadrupled down on their short position and started making synthetic shares (IOUs) and selling those shares into the market trying to drive the price down. When the price dropped, instead of selling like the hedge funds wanted them to, Apes said “thank you very much for the discount” and kept buying more and holding. Nobody has sold for the past 5 months since the movement really got started in January, and more and more people are jumping in and adding more everyday.

Now because of all of the synthetic IOU shares the hedge funds have created to keep shorting AMC, us Apes likely own more way more shares than are actually supposed to exist (as much as 6x-8x by some estimates). But real or synthetic, each share the hedge funds sold short is a liability on their books that must be bought back in order to close out their position.

They literally have hundreds of millions of shares, possibly billions, to buy back, and we own them all. They have to buy them back eventually, and every day that the borrowed short shares are still on loan, the hedge funds are paying interest to the brokers they borrowed them from. Meanwhile it costs us nothing to hold.

Things started to come to a head a couple weeks ago because the interest rate on the borrowed shares was reported to be as high as 250% (1-2% is normal for your average stock), so the hedge funds are collectively paying hundreds of millions of dollars every day just to hold their position, and a lot of them are starting to miss the payments and margin calls could be coming very soon.

That’s when the fun starts. At that point, the broker forces them to buy back all of the hundreds of millions of shares they have borrowed and sold short, because the broker doesn’t want the hedge funds’ recklessness to fall onto them. And remember, the Apes own all the shares and aren’t selling. The hedge funds can only buy a share for what an Ape is willing to sell it for, and us Apes really love our shares.

Once the margin calls start, the computers just start buying back all of the shares at the best available price no matter what that price may be. They all have to be bought back. Everything must be settled. And if the cheapest price an ape is willing to sell for is 1,000, or 10,000 or 100,000, well then that’s what the hedge funds will be forced to buy the borrowed shares back for in order to close out their position.

Apes are going to hold and hold and hold driving up the price further and further to make the hedge funds bleed as much as possible until they are inevitably forced to buy back their millions of shares. They will need to buy our shares, and we set the price. And remember, it costs us nothing to hold. This movement has been building for the past 5 months, but you just heard about it yesterday. One thing Apes don’t do is set dates for the squeeze. Nobody knows when it will happen, all we know for sure is that the math says it’s inevitable as long as we hold.

I only see three possibilities as to how this all plays out:

1. AMC goes bankrupt and the hedgies win (please note this is not going to happen. AMC has enough liquidity to last them through 2022 and the most passionate shareholder base in the universe. Not to mention a pretty badass CEO who has completely embraced the new shareholder base)

2. Hedge funds are somehow able to meet their daily margin payments to avoid being margin called, and they strategically close out their short positions over time, causing a sustained Tesla type squeeze over a period of a year or more (remember, apes aren’t selling until we’re at the moon)

3. Hedge funds will be margin called and forced to buy everything all at once and we’ll have the most violent squeeze in the history of short squeezes. The price is infinite as long as apes hold.I wouldn’t bet on #1, #2 will require patience, and #3 will be absolute insanity (and in my personal non-financial advisor opinion is the most likely outcome). Either way, we’re winning the battle. This beautiful movement is growing by the day, and we can hold longer than they can.

Never before has anything like this happened where millions of regular people have been able to band together to take on the billionaires who have been screwing them over time and time again, and be able to actually hit them where it really hurts. It is the big hedge fund himself on the other side (you know the one) who has his hands in all the retail brokerage apps to make sure our orders get routed to him to fill. And then they fill them with synthetic shares that they don’t even have and dig themselves even deeper. They created and marketed easy access to the stock market to the retail investor because they only saw the retail investor as prey. Just another way to bleed us dry. They never saw this coming.

Like I said, everything will eventually have to be settled. Margin calls are coming. And the SEC has already enacted several rules to prepare as much as possible for the catastrophic fallout from this event, and to make sure that something like this can never happen again. The millions of little guys with an app in their hand are a threat now, and I’m sure they’ll adapt to it. So this could very well be a once in a lifetime opportunity here. Although I’m not a financial advisor….AMC AMarginCall

Everyone is here for hedge funds and i'm here tryna prepare myself for the financial industry when im older lmao

This guy has taught me everything on khan

Came here to know what hedge funding is. Still confused.

You said doo doo at the beginning

AMC to the moon!! 💎 🙌 🐒

Hedge funds with only capital lower than hundred million dollars are not regulated by the SEC!

Sheeesh gamestop gamestop gamestop. Whos here not because of gamestop?

Great video.
"Incentivized" was the word you were looking for. 🙂

I'm lactose intolerant and can't stop farting ❤❤

Amc gang

"Can't take money from the public" Wrong: they get bailed out by the federal government with tax payers money. Hedgefunds are parasites who take high risks with 1000% leverage and manipulate the market.

I want to make my own hedge fund.

You know why we're here.

From what I understand from the situation with GameStop, r/wallstreetbets, and Hedgefunds:

The more money dumped to increase the stock of GameStop, the smaller the profits the Hedgefund managers get due to how the increase of costs associated with a rebounding business.

Like a vampire's victim suddenly getting a dose of adrenaline and the blood is getting suck back into them from the Vampire's mouth.

whats the next move everyone? take down the rich

So a lot of guys on Reddit put money on some businesses, the things worked out great, they got lucky and got money and they could potentially do it again because they’re so many that it doesn’t even matter if some lose money since they’re putting a little bit of money individually but the money they put together is a lot, apes together strong (that’s what I understood from other videos correct me if I m wrong)

Gamestop got me interested in stock market and economics.

@ 1:25
So basically, "it's a big club, and you ain't in it."
~ George Carlin

How the hello can they not make that illegal...?

00:10 it became true!!

Here because I realized public education hasn't taught me shit

I feel like I'm peeking behind the curtain to catch a glimpse of some fuckin voodoo ritual with snakes and candles and shit.

He said duu-duu. Ha!

POV: You want to understand what's going with Wall street bets, Game Stop and Hedge Funds.

I’m just here trying to understand what’s going on with GameStop and why it’s going to the moon 🚀🚀🚀

Damn Khan... Usually takes 10 minutes explaining.. why this one is short

Buy AMC make them lose more

how does he write with the mouse so well

666k views oof.

I think Sal worked for a couple years at a hedge fund

Are U kidding or may be I don't understant smth. So if they take about 20-30% of profit, so what is the total gain, the total profit. 50-70%??? Or U are talking about a situation when you invest X and get at the end 100-200X. If so then how many years does it take?

They don’t get 20% of profits, they get 20% of returns over a certain threshold

So what are they?

Excellent video , trader's not to be aware of this, it's not all about trading but knowing what you are doing, and understanding everything about it ,you have to master it's strategy and market movement, you should rush into any broker because you will turn having no profit in return, it's been 2 months now trading and i have been earning awesomely, with the help of an expert trader Mr Carlton Jefferson, who hs been my guide and now am a proud trader of my own, i started trading with a capital of $17,500, and i now make a profit of $120,500 USD, Carlton Jefferson is the best, he is the only broker i can recommend to anyone, everyone wants to invest and make profit, i tell you one thing,is not all about that, you have a proper understanding of what you are doing, contact him directly (carltonjefferson76@gmail.com) you can as well check him out on instagram @Carlton_jefferson_trading

Attention All. This is an amazing video. Best online investment company for everyone.

the reason why im here is because of Bobby Axlerod

Wordy and repetative.And please stop writing stuff down...OK just filling time...but!!

Is this VladTV