Cornering a market in finance means gaining near-total control over the supply of a particular asset, like a commodity, currency, or specific stock. This allows the cornering entity to dictate prices and profit handsomely, at least temporarily.
The process typically involves aggressively buying up the majority of the available supply. This can be achieved through various strategies, including:
- Direct Purchases: Accumulating the asset on the open market through numerous transactions.
- Futures Contracts: Amassing a significant position in futures contracts that require physical delivery of the underlying asset. This forces those who sold the contracts short (promising to deliver the asset) to buy it from the cornering entity at the inflated price.
- Information Control: Spreading misinformation to manipulate market sentiment and drive prices in a desired direction. While illegal, this tactic has been employed in some cornering attempts.
The goal is to create a situation where demand significantly outweighs the available supply controlled by anyone *but* the cornering entity. This creates a “squeeze,” forcing short sellers and other market participants to pay exorbitant prices to acquire the asset and cover their positions. The cornering entity profits from selling at these artificially inflated prices.
However, cornering a market is extremely risky and fraught with challenges. Firstly, it requires substantial capital. Buying up a significant portion of any market demands significant financial resources. Secondly, it’s difficult to achieve complete control. Other players may hold hidden reserves or find alternative sources of supply. Thirdly, regulatory scrutiny is intense. Market manipulation is illegal in most jurisdictions, and regulators actively monitor trading activity for signs of cornering. Proving intent is difficult, but suspicious trading patterns often attract investigation.
Furthermore, even if successful in the short term, cornering is often unsustainable. Artificially inflated prices encourage new entrants to the market, increasing supply and eventually undermining the corner. Substitutes for the cornered asset might also emerge, further reducing demand. The cornering entity then faces the challenge of liquidating its massive holdings without crashing the price, often resulting in significant losses.
Historical examples, like the Hunt brothers’ attempt to corner the silver market in the 1970s, illustrate the potential for spectacular profits *and* catastrophic losses. Their actions drove the price of silver to record highs before the market collapsed, resulting in billions of dollars in losses and ultimately leading to regulatory changes.
In conclusion, cornering a market is a high-stakes, high-risk endeavor. While the potential for profit is alluring, the difficulties, regulatory hurdles, and risk of market collapse make it a strategy best left to the history books.
699×486 cornering market silver futures market manipulation hunt brothers from efinancemanagement.com 
720×540 cornering techiques from www.thehappybiker.co.uk 
960×960 cornering techniques motorsports racing news blog articles racescene from www.racescene.com 
404×316 cornering projects logos illustrations branding from www.behance.net 
600×466 cornering market capitalcom from capital.com 
1200×675 basics cornering from www.tvsmotor.com 
602×900 cornering editorial stock image image movement compete from www.dreamstime.com 
1080×545 cornering technique essentials infographic drivemag riders from riders.drivemag.com 
1151×852 art cornering driving masters from www.drivingmasters.uk 
1200×630 cornering market from theecologist.org 
1024×683 tips smooth effective cornering from sportsincycling.com 
620×340 increase cornering capabilities budget racingjunk news from www.racingjunk.com 
1920×1080 cornering market definition works wall street from www.wallstreetoasis.com 
462×280 podium cornering stages background signs corporate stock vector from www.shutterstock.com 
970×516 video improve cornering roadcc from road.cc 
960×800 improving cornering avoiding auto pilot young drivers guide from www.ingenie.com 
2000×1333 finance corning ca from www.corning.org 
1200×618 secret cornering pro onwheels from www.o2w.co.uk 
480×400 improve ingenie cornering feedback young drivers guide from www.ingenie.com 
1200×800 sing investment finance greeen office interior renovation from greeen.sg 
1300×942 singaporean finance stock photo alamy from www.alamy.com 
640×452 financecorner solution handwiki from handwiki.org 
660×400 finance corner june westsider from thewestsider.com.au 
1000×562 pez movies masterclass art science cornering from pezcyclingnews.com 
320×320 illustration cornering path generated corner smoothing from www.researchgate.net 
