(FINANCE) hilarious term used for over a century in the trading of stocks, commodities, etc. A way in which someone who controls much of the outstanding shares of stock can make a lot of money while ruining those who are betting against the stock.
A "
short" is traditionally someone with expertise in shorting a stock, i.
e., managing to borrow shares and sell them in anticipation of a decline in value. Obviously, if there are many people shorting a particular stock at any given time, and if they are
wrong about the
future, then a steep rise in value if the share price will not only cause them to lose money, it will
force panic purchases of stock as the traders attempt to cover their shorts. If the instigator of the squeeze is successful, he will have a
corner, and drive the price of the stock up to absurd levels.
An unsuccessful squeeze of shorts in a copper
trust triggered the Crisis of 1907. That, in turn, triggered the Aldrich–Vreeland Act (May 1908).
The brokers, after awhile, commenced to borrow large amounts of the stock. This convinced the insiders that there was a big
short interest somewhere, and they got together in order to squeeze the shorts... They never awakened to the fact that the {president of the company} had sold out on them... {and were totally ruined}
Henry Clews,
Victor Niederhoffer, *Fifty Years in Wall Street*, p.149
