# Bear raid

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{{Short description|Stock trading strategy}}
A '''bear raid''' is a type of [stock market](/source/stock_market) strategy, where a [trader](/source/Trader_(finance)) (or group of traders) attempts to force down the price of a [stock](/source/stock) to cover a [short position](/source/short_selling). The name is derived from the common use of [''bear'' or ''bearish''](/source/Market_trend) in the language of [market sentiment](/source/market_sentiment) to reflect the idea that investors expect downward price movement.<ref>{{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}}</ref>

A bear raid can be done by spreading negative [rumor](/source/rumor)s or misinformation about the target firm,<ref>{{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}}</ref> which puts downward pressure on the share price. This is typically considered a form of [securities fraud](/source/securities_fraud).{{Citation needed|date=August 2024}} Alternatively, traders could take on large short positions themselves, [manipulating](/source/market_manipulation) the price with the large volume of selling,<ref>{{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}}</ref> making the strategy [self-perpetuating](/source/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|thumb|Replica of an [East Indiaman](/source/East_Indiaman) of the [Dutch East India Company](/source/Dutch_East_India_Company)/United East Indies Company (VOC)]]

The practice of bear raid has its roots in the 17th-century [Dutch Republic](/source/Dutch_Republic). In 1609, [Isaac Le Maire](/source/Isaac_Le_Maire), a sizeable shareholder of the [Dutch East India Company](/source/Dutch_East_India_Company) (VOC), organized a bear raid on the stock of the company.<ref>{{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](/source/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](/source/short_selling), [option trading](/source/option_trading), debt-equity swaps, [merchant banking](/source/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](/source/boom-bust_cycle), the world's first asset-inflation bubble, the [tulip mania](/source/tulip_mania) of 1636-37, and even, in 1607, history's first bear raider, a canny shareholder named [Isaac le Maire](/source/Isaac_le_Maire) who dumped his VOC stock, forcing the price down, and then bought it back at a discount.}}</ref>

== See also ==
* [Short and distort](/source/Short_and_distort)
* [Uptick rule](/source/Uptick_rule)
* [Bull market](/source/Bull_market)

==References==
{{Reflist}}

Category:Stock market
Category:Finance fraud
Category:Dutch inventions

{{finance-stub}}

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