Bubbles And Crashes | Planet Finance | FD Finance

‘The Big Short’ showcases the unprecedented clash between small investors and hedge funds during the financial crisis, highlighting the dynamics of financial markets and investment strategies.

On Planet Finance, it often seems like individuals stand little chance against the system. Yet, even here, some dare to swim against the tide: the so-called short sellers. Sometimes labeled as the vultures of Planet Finance, short sellers thrive on the mistakes of others. They only win when others lose. Their strategy relies on the fact that many investors get swept up in market hype and pour money into stocks. Instead of betting on rising prices, short sellers wager that they will fall—perhaps because a company is overvalued or investors have been misled by deceptive practices.

This episode highlights three companies that were once darlings of the stock market, even earning the coveted “unicorn” status—a term Planet Finance uses for the rare firms with valuations of over a billion dollars. These include the Flemish speech recognition company Lernout & Hauspie, the German financial services provider Wirecard, and the U.S. video game retailer GameStop. All three plummeted, dragging countless unsuspecting investors down with them.

So, who are these short sellers who dare to challenge the overwhelming momentum of a market frenzy?