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Zerodha CEO Nithin Kamath on GameStop, short squeeze and why Indian investors have nothing to fear

While everyone is celebrating retail traders winning over a large hedge fund, it rarely ever plays out this way. Mostly, retail ends up losing money when there is excessive speculation, says Kamath.

January 29, 2021 / 11:28 AM IST
Image: AFP

Image: AFP

I guess you have read the headlines from the US on how retail traders are causing a “short squeeze” in stocks like GameStop, American Airlines and AMC Entertainment.

We have been getting a lot of questions around shorting and if a short squeeze of this scale can happen in stocks listed on Indian exchanges. It cannot and I explain why:

Quick intro to stock lending and borrowing (SLB)

Many people who invest in the markets think that the only way to profit is by buying stocks that have the potential to grow with an expectation that if the companies do well, the prices will also go up. This buying of stocks is also called going “long”.