The practice of holding or piling up of assets in preparation for future event(s)
What is Hoarding?
In terms of finance, hoarding is the practice of holding or piling up of assets, namely money, goods, or securities. Preparation for future events causes individuals or companies to save up such assets. However, hoarding occurs when the act of saving goes above and beyond what is needed for immediate profit, covering expenses, or reasonable preparation for future events. In most cases, it happens because an individual or company fears what could happen in the future – lack of funds, higher stock prices, etc.
Hoarding crosses into another category altogether when a company uses it as a business strategy to manipulate the market. The practice is known as “cornering the market.”
Cornering the Market
Companies or individuals often try to corner the market by buying up a substantial portion of goods/securities in a respective market. The goal is to eliminate the market rivals, effectively gaining the ability to drive up prices, with the intention to resell the goods/securities at an inflated price.
Cornering the market is illegal and usually unsuccessful. When a company begins to stockpile securities or commodities, they give themselves away. Once the information becomes public, oppositional forces rise up against the attempted corner, essentially blocking the attempt at a market takeover. While similar to monopolization, cornering the market differs in that other companies are still able to operate in the space and generally are able to block the cornerer.
The Legality of Hoarding
In essence, hoarding is not illegal. However, once an individual or company begins to buy up or stockpile large amounts of a commodity or security, the Securities and Exchange Commission (SEC) watches closely. The federal agency works to make sure that an individual or company is not trying to monopolize or corner the market. Currently, there are SEC rules and regulations in place to keep entities in check and to prevent a cornering situation from taking shape.
It’s not always clear when an entity (individual or company) starts to hoard if they are simply fearful of future events or if they are keen to manipulate prices by cornering the market. Hence, there are regulatory bodies and rules in place that are used to monitor hoarding behaviors in order to prevent illegal manipulation of the market.
Hoarding Throughout History
There are several examples of hoarding throughout history; however, the most notorious case is that of the three Hunt Brothers who, in the 1980s, attempted to corner the silver market. A decade earlier, the brothers began purchasing bulk amounts of silver that was trading for around $1.50/ounce.
Over the next 10 years, the brothers bought up the majority of the market’s physical silver, stashing it in banks around the globe. They also took up buying futures contracts, giving them the opportunity to purchase 55 million ounces of silver.
Silver spiked to around $50/ounce at the beginning of 1980. The brothers were unable to buy up more silver because they could no longer secure financing for it. Their inability to continue cornering the market forced them to begin selling silver. The sudden release of large amounts of silver back into the market caused silver prices to plummet. By the time the fiasco ended, the brothers barely escaped complete financial ruin.
Final Word
There is a certain logic to hoarding, particularly for individuals. When companies begin to hoard, the line between stockpiling and cornering the market becomes blurred. The key difference between legal hoarding and illegal cornering attempts is intent. Stockpiling resources to manipulate the market (cornering) is highly illegal.
More Resources
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FAQs
The five stages of hoarding are minimal clutter, mild clutter, moderate clutter, severe clutter, and extreme clutter. Signs of hoarding include acquisition, clutter, difficulty discarding, disorganization, difficulty with decision-making, social isolation and impairment.
What is the root cause of hoarding? ›
Some people develop hoarding disorder after experiencing a stressful life event that they had difficulty coping with, such as the death of a loved one, divorce or losing possessions in a fire.
What should you not say to a hoarder? ›
Use respectful language. Don't refer to their possessions as 'junk' or 'rubbish'. This shows that you don't understand their connection to the objects or why they want to keep them. They will be less likely to open up to you if you talk about their things this way.
What childhood trauma causes hoarding? ›
Some researchers believe hoarding can relate to childhood experiences of losing things, not owning things, or people not caring for you. This might include experiences like: Money worries or living in poverty in childhood. Having your belongings taken or thrown away by someone.
What does a level 1 hoarder look like? ›
Indicators include difficulty parting with redundant items, excessive shopping for items already in the home or not needed, accessible stairs, doors, and windows, no noticeable odors in the home, little to no visible clutter on surfaces or in walkways, and sanitation and cleanliness existing within the home.
What does level 2 hoarding look like? ›
Level 2 hoarders begin to misplace items because it is buried in other stuff. The fridge becomes overstuffed, and expired items litter the stockpile. Dishes are usually piled up in the sink and on countertops, making the surfaces unusable.
Do hoarders know they have a problem? ›
Some individuals with hoarding disorder may recognize and acknowledge that they have a problem with accumulating possessions; others may not see a problem.
What kind of personality does a hoarder have? ›
Personality: Many people with hoarding disorder show indecisiveness or perfectionism. Heredity: If you have a family member with hoarding disorder, you are more likely to develop it yourself. Stressful life events: Triggers such as the death of a loved one, an eviction, or divorce may trigger hoarding behavior.
What mental illness do most hoarders have? ›
Compulsive or problematic hoarding behaviors occur in a variety of neuropsychiatric disorders, including obsessive compulsive disorder (OCD), schizophrenia, and dementia.
What is the fastest way to clean a hoarder's house? ›
How to clean a hoarder's house
- Evaluate the area and create a decluttering/cleaning strategy. ...
- Be sure to protect yourself. ...
- Collect plenty of cleaning supplies. ...
- Start with a Small Room. ...
- Classify the group of things that needs to be cleaned. ...
- Prioritize cleaning order from the beginning. ...
- Empty Rooms, Top to Bottom.
It's not easy to treat a hoarding disorder, even when the person is prepared to seek help, but it can be overcome. The main treatment is cognitive behavioural therapy (CBT). The therapist will help the person to understand what makes it difficult to throw things away and the reasons why the clutter has built up.
How to stop enabling a hoarder? ›
As a hoarder may not want to admit to their behaviour, here are some effective actions to take to help people with hoarding disorder.
- Avoid Force. ...
- Create A Discussion. ...
- Show Your Love. ...
- Ask Them to Seek Professional Help. ...
- Ask Them Questions. ...
- Don't Clean Their Home. ...
- Educate Yourself. ...
- Ensure the Person Wants to Make a Change.
In men, hoarding is associated with generalized anxiety disorder and tics, while among women, hoarding is associated with social phobia, post-traumatic stress disorder, body dysmorphic disorder, and compulsive grooming behaviors like nail-biting and skin-picking.
Why do hoarders keep feces? ›
Some hoarders feel an attachment to their excrement and begin hoarding it along with possessions and trash. This is the most extreme kind of hoarding, even in stage 5, and needs a professional decontamination crew to aid in cleanup.
Do hoarders have abandonment issues? ›
Loss and grief: Death, divorce or other pivotal life shifts can trigger hoarding behaviors. Objects can become symbolic, representing memories or a semblance of stability amid chaos. Childhood traumas: Those who endured childhood adversities, like abuse or abandonment, might see their possessions as protective shields.
What does a level 3 hoarder look like? ›
Hoarding Level Three: One bedroom or bathroom is unusable, Excessive dust, heavily soiled food preparation areas, strong odors throughout the home, excessive amount of pets, and visible clutter outdoors.
What is a level 4 hoarder? ›
Summary: Hoarding level 4 is the second most severe level of hoarding, where multiple rooms are unusable, multiple exits are blocked, there are sewage issues, overpowering odors, large quantities of mold and mildew, and structural damage to the house that is at least 6 months old.
What mental illness is associated with hoarding? ›
Compulsive or problematic hoarding behaviors occur in a variety of neuropsychiatric disorders, including obsessive compulsive disorder (OCD), schizophrenia, and dementia.
What are the different types of hoarding? ›
Common types of hoarding include food hoarding, animal hoarding, garbage or trash hoarding, sentimental hoarding, and media or paper hoarding.
