bear raid
{{Short description|Stock trading strategy}}
A bear raid is a type of stock market strategy, where a trader (or group of traders) attempts to force down the price of a stock to cover a short position. The name is derived from the common use of bear or bearish in the language of market sentiment to reflect the idea that investors expect downward price movement.{{cite book|editor1-last=Law|editor1-first=Jonathan|title=A dictionary of finance and banking.|date=2008|publisher=Oxford University Press|location=Oxford|isbn=9780199229741|edition=4th|url=https://books.google.com/books?id=9SaLP0be02sC&pg=PA42|accessdate=22 November 2014}}
A bear raid can be done by spreading negative rumors or misinformation about the target firm,{{cite book|last1=Malik|first1=Andrew|last2=Sarna|first2=David E.Y.|title=History of Greed Financial Fraud from Tulip Mania to Bernie Madoff.|date=2010|publisher=John Wiley & Sons|location=Hoboken|isbn=9780470877708|page=62|url=https://books.google.com/books?id=KxMnRJ0-__UC&pg=PT62|accessdate=22 November 2014}} which puts downward pressure on the share price. This is typically considered a form of securities fraud.{{Citation needed|date=August 2024}} Alternatively, traders could take on large short positions themselves, manipulating the price with the large volume of selling,{{cite book|last1=Scott|first1=David L.|title=Wall Street words : an A to Z guide to investment terms for today's investor|date=2003|publisher=Houghton Mifflin|location=Boston|isbn=0618176519|page=28|edition=3rd ed., newly revised and updated.|url=https://books.google.com/books?id=7hsXI8_zwoEC&pg=PA28|accessdate=22 November 2014}} making the strategy self-perpetuating.{{Citation needed|date=August 2024}}
History
{{See also|Financial history of the Dutch Republic|Dutch East India Company}}
File:Vereenigde Oostindische Compagnie spiegelretourschip Amsterdam replica.jpg of the Dutch East India Company/United East Indies Company (VOC)]]
The practice of bear raid has its roots in the 17th-century Dutch Republic. In 1609, Isaac Le Maire, a sizeable shareholder of the Dutch East India Company (VOC), organized a bear raid on the stock of the company.{{cite journal|author=Sayle, Murray|author-link=Murray Sayle|date=2001-04-05|title=Japan goes Dutch|url=http://www.lrb.co.uk/v23/n07/murray-sayle/japan-goes-dutch|journal=London Review of Books|volume=23|issue=7|pages=3–7|issn=0260-9592|accessdate=2017-11-01|quote=...Dutch market punters pioneered short selling, option trading, debt-equity swaps, merchant banking, unit trusts and other speculative instruments, much as we now know them. With them came specialised offshoots – insurance, retirement funds and other orderly forms of investment – and the maladies of capitalism: the boom-bust cycle, the world's first asset-inflation bubble, the tulip mania of 1636-37, and even, in 1607, history's first bear raider, a canny shareholder named Isaac le Maire who dumped his VOC stock, forcing the price down, and then bought it back at a discount.}}