macrocephalopod

So the point I’d make to refute : @Post_Market may weigh in or disagree 1) long/short pod models were running near peak leverage and max long going into this 2) as shorts run up they need to take leverage down which reduces whatever prior position was (so sell Longs)

There’s a tenuous but plausible story here. Obviously degrossing *per se* cannot cause a market crash since the same amount of stocks will be bought and sold. But it has knock on effects which *could* contribute to a market crash. Specifically, when a fund

degrosses it causes losses for other funds with similar positions as the longs are pushed down and the shorts up (and equity long/short funds and multi-manager pod shops tend to have quite large position overlap). This means two things -