A story about a pathetic man's downfall [34 Felony Convictions]

[Rimbo 25919]

Yes, Lobo. We're talking about stocks.

[Pato del Muerto 52489]

12 minutes ago, Rimbo said:

It's just short covering.

[Gil Bang 25944]

17 minutes ago, Rimbo said:

It's just short covering.

more like shart covering

[Rimbo 25919]

55 minutes ago, Pato del Muerto said:

tl;dw:

You sell a bunch of shares you don't have (short selling), planning on buying them later (covering). If everyone's shorting a stock at once, the sells drive the stock down; they then all might end up covering at once, making it go up slightly, also known as the Dead Cat Bounce.

Longer:

Trading Places' ending is downright educational. Winthorpe and Valentine give the Dukes a fake crop report, making the brothers think there was a shortage of oranges, so the Dukes start buying a lot of shares, expecting the value of OJ to increase greatly once the report is made public. A bunch of traders see this, and try to get in on it, driving the price up. Then Winthorpe and Valentine start short-selling once it gets high enough -- they don't have any of these shares, yet, they just grab a ton of money on shares they promise to buy in the future, suddenly driving the price down a little bit, alerting the Dukes that something is wrong.

Then the actual report gets read, and everyone realizes they're holding overpriced OJ shares, and start selling it off, driving the price down like crazy. Once it gets to a fraction of its starting price, Winthorpe and Valentine cover, buying back at a fraction of the price all the shares they'd sold. In the end, W&V pocket a shit-ton of money and own most of the OJ market, and the Duke brothers' assets get seized to cover their losses.

Edited April 19 by Rimbo

[mchookem 16327]

[TexasEd 8066]

13 minutes ago, Rimbo said:

Then Winthorpe and Valentine start short-selling once it gets high enough -- they don't have any of these shares, yet, they just grab a ton of money on shares they promise to buy in the future, suddenly driving the price down a little bit, alerting the Dukes that something is wrong.

Then the actual report gets read, and everyone realizes they're holding overpriced OJ shares, and start selling it off, driving the price down like crazy. Once it gets to a fraction of its starting price, Winthorpe and Valentine cover, buying back at a fraction of the price all the shares they'd sold. In the end, W&V pocket a shit-ton of money and own most of the OJ market, and the Duke brothers' assets get seized to cover their losses.

Don't believe this is true.  The sold shares they did not have (the short) and then they bought them later at a lower price (the cover) to deliver to the people that bought from them at the higher price.  If it is a pure cover play they only buy enough to satisfy the obligation to deliver the shares they sold short.

Break

Once the covers are bought then you might see another round of short selling.  

 

When Gamestop was a big deal this was happening except the meme traders did not sell their shares so the short sellers had to cover with inflated stock prices and actually lost money.

 

[Rimbo 25919]

3 minutes ago, TexasEd said:

If it is a pure cover play they only buy enough to satisfy the obligation to deliver the shares they sold short.

I mean, the movie doesn't say one way or the other how much of the OJ market they end up with.

BUT: It does say that the Dukes are aiming to corner the market, and yet W&V were selling (at the start of trading) so many shares that, despite the Dukes and everyone else buying, the price actually started to fall before the real crop report was read. Which means W&V were selling, and later covering, a fuckton of shares.

It's implied that they ended up with a substantial portion of the market when they covered.

[Biff Tannen 45673]

If we are going down this path, can we at least post some Jamie Lee Curtis titties?

[TexasEd 8066]

6 minutes ago, Rimbo said:

I mean, the movie doesn't say one way or the other how much of the OJ market they end up with.

BUT: It does say that the Dukes are aiming to corner the market, and yet W&V were selling (at the start of trading) so many shares that, despite the Dukes and everyone else buying, the price actually started to fall before the real crop report was read. Which means W&V were selling, and later covering, a fuckton of shares.

It's implied that they ended up with a substantial portion of the market when they covered.

I disagree, The Dukes ended up with a substantial portion of the market but they overpaid and when they go to deliver to grocery stores or whatever they will not recoup their investment.

EDIT:  It's also implied that the Dukes bought on margin (a loan) and the assets they bought were valued at less than what they borrowed and the lender called the loan and demanded cash since the collateral (the commodity) was not worth what they owed.

Edited April 19 by TexasEd

[Biff Tannen 45673]

Thank you TexasEd

[Goredho 17399]

33 minutes ago, Rimbo said:

tl;dw:

You sell a bunch of shares you don't have (short selling), planning on buying them later (covering). If everyone's shorting a stock at once, the sells drive the stock down; they then all might end up covering at once, making it go up slightly, also known as the Dead Cat Bounce.

Longer:

Trading Places' ending is downright educational. Winthorpe and Valentine give the Dukes a fake crop report, making the brothers think there was a shortage of oranges, so the Dukes start buying a lot of shares, expecting the value of OJ to increase greatly once the report is made public. A bunch of traders see this, and try to get in on it, driving the price up. Then Winthorpe and Valentine start short-selling once it gets high enough -- they don't have any of these shares, yet, they just grab a ton of money on shares they promise to buy in the future, suddenly driving the price down a little bit, alerting the Dukes that something is wrong.

Then the actual report gets read, and everyone realizes they're holding overpriced OJ shares, and start selling it off, driving the price down like crazy. Once it gets to a fraction of its starting price, Winthorpe and Valentine cover, buying back at a fraction of the price all the shares they'd sold. In the end, W&V pocket a shit-ton of money and own most of the OJ market, and the Duke brothers' assets get seized to cover their losses.

[Rimbo 25919]

3 minutes ago, TexasEd said:

I disagree, The Dukes ended up with a substantial portion of the market but they overpaid and when they go to deliver to grocery stores or whatever they will not recoup their investment.

The Dukes ended up penniless before they left the trading floor. Their guy on the floor was buying up until the end, but they didn't have the cash to cover what they'd purchased, so all of their assets were seized. The exchange leadership went Laetitia James on 'em.

Just now, Goredho said:

[YGIFS 19450]

The Dukes also had a combination of a plot device and margin call advantage being that "We founded this Exchange"  But the basic Call/Put/Coverage mechanisms still hold as firm as Jamie Lee's buttocks on a crisp December's morn.  Cash calls are Cash calls until you get raped by a gorilla on a train.  Wait, what are we talking about again?  The tacit implication is that they got greedy with their spread attempt.  They would have gotten away with it had they not gone so naked on the commodity delta.  It's an inside joke because they only bet $1 on a man's life.  Speaking of Delta, what's that Constance song again?  And she stepped on the ball? 

Anyway, the gamestop model would work here but for the much more intense media spotlight on it all.  The downfall of the stock won't be the valution/PE/revenue models...we've all seen worse.  It will be the inevitable SEC filing disclosing who bought up the shares and took the company private to provide Trump the much needed liquidity.  His minions won't care but the average American with the average 401k/IRA will take note, "Why didn't a foreign government buy my portfolio and cash me outside?" 

He's playing it one week at a time.  Which is understandable, considering this orange buffoon is at the steps of its last weeks...  

[safe sex 11709]

That you can sell something you don't actually have yet is bonkers to me.

[Rimbo 25919]

3 minutes ago, safe sex said:

That you can sell something you don't actually have yet is bonkers to me.

You are held to the promise to buy it back, is the key. You are contractually bound to the shares you sold, just as if you'd owned them in the first place.

[YGIFS 19450]

3 minutes ago, safe sex said:

That you can sell something you don't actually have yet is bonkers to me.

Movie theaters, Hookers, and Commodity/Derivative traders.  Only three industries where you gotta put the money on the counter first before you get the goods.  

Coincidence?  So says Frank Stallone.  

[Gil Bang 25944]

7 minutes ago, safe sex said:

That you can sell something you don't actually have yet is bonkers to me.

the stock market is 100% bullshit.   It went from providing financing to growing businesses, to a bunch of fucks in expensive suits inventing bullshit to increase their bonuses. 

[Biff Tannen 45673]

6 minutes ago, Gil Bang said:

the stock market is 100% bullshit.   It went from providing financing to growing businesses, to a bunch of fucks in expensive suits inventing bullshit to increase their bonuses. 

this this this this this this this this

[safe sex 11709]

11 minutes ago, Rimbo said:

You are held to the promise to buy it back, is the key. You are contractually bound to the shares you sold, just as if you'd owned them in the first place.

That's still insane.

[immamac 42839]

34 minutes ago, Gil Bang said:

the stock market is 100% bullshit.   It went from providing financing to growing businesses, to a bunch of fucks in expensive suits inventing bullshit to increase their bonuses. 

Ding ding ding ding. 

[Upgrayedd 5810]

54 minutes ago, safe sex said:

That you can sell something you don't actually have yet is bonkers to me.

Wait until you hear about futures contracts 

[safe sex 11709]

[dcbc 14471]

8 hours ago, TexasEd said:

It's also implied that the Dukes bought on margin

It's not implied.  They are approached after trading subsides and are told, "Margin call, gentlemen."

[dcbc 14471]

7 hours ago, Gil Bang said:

the stock market is 100% bullshit.   It went from providing financing to growing businesses, to a bunch of fucks in expensive suits inventing bullshit to increase their bonuses. 

[Captainant 27653]

8 hours ago, Gil Bang said:

the stock market is 100% bullshit.   It went from providing financing to growing businesses, to a bunch of fucks in expensive suits inventing bullshit to increase their bonuses. 

But what if I showed you a chart with a line going up and called you a socialist?

[Francisco 2.0 32389]

He's having a hard time this morning.  All 5 of these were within a 2 minute span:

 

 

 

 

 

 

 

[ultimaton 2972]

Just have a fatal heart attack already, geez

[GenXer 2850]

12 hours ago, Gil Bang said:

the stock market is 100% bullshit.   It went from providing financing to growing businesses, to a bunch of fucks in expensive suits inventing bullshit to increase their bonuses. 

While true, I prefer Margot Robbie’s explanation.

 

[Rimbo 25919]

7 minutes ago, GenXer said:

While true, I prefer Margot Robbie’s explanation.

 

Same.

All y'all bitches need to go watch The Big Short and Trading Places. Get yourselves educated. Now.

[TwiceHorn 31449]

13 hours ago, safe sex said:

That's still insane.

For a fully legal short sale, you borrow the shares you sell, and it is the borrowing contract that obligates you to cover, that is, return the shares to the party from whom they were borrowed, you hope purchased at a lower price.

Naked shorts, without the borrowing part, are illegal but still happen.  Surprise.

[C-Man 27214]

"Margot Robbie" and "naked shorts"

Yes, please.

[safe sex 11709]

3 minutes ago, TwiceHorn said:

For a fully legal short sale, you borrow the shares you sell, and it is the borrowing contract that obligates you to cover, that is, return the shares to the party from whom they were borrowed, you hope purchased at a lower price.

Naked shorts, without the borrowing part, are illegal but still happen.  Surprise.

My opinion remains unchanged.

Is there an actual purpose other than increasing personal wealth?

[dcbc 14471]

31 minutes ago, safe sex said:

My opinion remains unchanged.

Is there an actual purpose other than increasing personal wealth?

It's off-track betting in a fancy frock.

Edited April 19 by dcbc

[TwiceHorn 31449]

34 minutes ago, safe sex said:

My opinion remains unchanged.

Is there an actual purpose other than increasing personal wealth?

Short sales apply downward pressure on the price of an over-valued stock. Just plain sales of a stock do, but less so. 

Yes, the stock market/financial markets are a big load of bullshit, but short selling has been around for a long time and is regarded as a "price discovery mechanism." That is, it helps the market figure out the best or right price for a stock. 

ETA I am not trying to change your opinion, just give you another data point. I fully agree that the market is D&D for rich fuckers, but in the grand scheme of things, short selling is on the legitimate and long-standing transactions, compared to say, credit default swaps on CDOs. 

Edited April 19 by TwiceHorn

[dcbc 14471]

Just now, TwiceHorn said:

Short sales apply downward pressure on the price of an over-valued stock. Just plain sales of a stock do, but less so. 

Yes, the stock market/financial markets are a big load of bullshit, but short selling has been around for a long time and is regarded as a "price discovery mechanism." That is, it helps the market figure out the best or right price for a stock. 

It keeps people betting no matter how the "market is doing."  It's like free drinks in a casino.

[Art Vandelay 1712]

He's having a hard time this morning.  All 5 of these were within a 2 minute span:
 

 

 

 

 

 
 

[safe sex 11709]

1 hour ago, dcbc said:

It keeps people betting no matter how the "market is doing."  It's like free drinks in a casino.

I hate how good of a metaphor this is.

[Pato del Muerto 52489]

59 minutes ago, safe sex said:

I hate how good of a metaphor this is.

Well it’s a simile

eta:  unless you read it as “it’s, like, free drinks in a casino.”

Edited April 19 by Pato del Muerto

[safe sex 11709]

...I did. To use a favorite Surly excuse, I'm high af right now

[dcbc 14471]

25 minutes ago, Pato del Muerto said:

Well it’s a simile

eta:  unless you read it as “it’s, like, free drinks in a casino.”

All similes are a type of metaphor, but not all metaphors are similes.

[C-Man 27214]

3 minutes ago, dcbc said:

All similes are a type of metaphor, but not all metaphors are similes.

[safe sex 11709]

17 minutes ago, dcbc said:

All similes are a type of metaphor, but not all metaphors are similes.

 

Edited April 19 by safe sex

[Rimbo 25919]

3 hours ago, safe sex said:

My opinion remains unchanged.

Is there an actual purpose other than increasing personal wealth?

That's the only purpose for any and all investing. Why do you say that like it's a bad thing?

[safe sex 11709]

Of course profit is always in the equation for why someone invests. But is there not a difference between someone who invests because they believe in the business and want to have a say in how it's run in order to, ultimately, make more money, and someone who sells something they don't own yet in hopes of manipulating the market for a quick turnaround that probably harms a lot more people than it helps?

I believe capitalism with all of its flaws is still the best overall philosophical model to base a society on. But the way we approach it has got to change, and shit like short selling (among many, many other stock-related manipulations) needs to have maybe a few more rules that apply to it. What they would be I have no fucking clue, obv.

Could also be that I'm just stupid and naive, but there are worse things.

Edited April 19 by safe sex

[TwiceHorn 31449]

10 minutes ago, safe sex said:

Of course profit is always in the equation for why someone invests. But is there not a difference between someone who invests because they believe in the business and want to have a say in how it's run in order to, ultimately, make more money, and someone who sells something they don't own yet in hopes of manipulating the market for a quick turnaround that probably harms a lot more people than it helps?

I believe capitalism with all of its flaws is still the best overall philosophical model to base a society on. But the way we approach it has got to change, and shit like short selling (among many, many other stock-related manipulations) needs to have maybe a few more rules that apply to it. What they would be I have no fucking clue, obv.

Could also be that I'm just stupid and naive, but there's worse things.

Well there are certain investments that are utterly unavailable to most that serve very little purpose in the capital markets except to make banks and similar more money. Which arguably very arguably, makes them better available to serve capital markets through more conventional vehicles that still bear some relationship to raising capital and lending. 

Short selling stock is not really one of those but it can be very risky and most retail investors don't indulge in it. 

Put options are a pretty similar way to bet on a stock going down or short, and is more common among retail investors. 

Edited April 19 by TwiceHorn

[safe sex 11709]

And I'm sure they're all used very responsibly.

[Pato del Muerto 52489]

1 minute ago, safe sex said:

And I'm sure they're all used very responsibly.

Yes. Responsibility and accountability were the lessons learned and taken to heart after the bank bailouts. 

[atomheartbevo 89648]

 

[TexasEd 8066]

5 hours ago, Art Vandelay said:

*44 previous presidents

[tx 3 putt 76905]