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

Why not? A gap down in price destroys value expeditiously, especially if flows are moving overwhelmingly in one direction

My point is that if you are degrossing but maintaining the same net exposure, then the net flows are balanced and not overwhelmingly in one direction, so you don’t expect the overall market to go up or down (though can be large moves in individual name).