Editing Talk:2094: Short Selling
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::It makes sense from what I remember from economics in high school: you buy stocks in advance for significantly above asking price hoping they gain more value before the deal happens, so let's say 1 share of company X is worth 20$ right now. Now I can offer you a contract that I'll buy this share from you for 50$, but on the condition that the deal happens in a week. If the value of the company stays the same, I make a loss; but if the value rises within that week and one share is suddenly worth, let's say 2000$, I make an immense profit. (divide each value I gave by ten and you have the bean/witch/child analogy from the comic) It's basically gambling on the hope that the value of stock rises. --[[Special:Contributions/172.68.50.118|172.68.50.118]] 17:24, 4 January 2019 (UTC) | ::It makes sense from what I remember from economics in high school: you buy stocks in advance for significantly above asking price hoping they gain more value before the deal happens, so let's say 1 share of company X is worth 20$ right now. Now I can offer you a contract that I'll buy this share from you for 50$, but on the condition that the deal happens in a week. If the value of the company stays the same, I make a loss; but if the value rises within that week and one share is suddenly worth, let's say 2000$, I make an immense profit. (divide each value I gave by ten and you have the bean/witch/child analogy from the comic) It's basically gambling on the hope that the value of stock rises. --[[Special:Contributions/172.68.50.118|172.68.50.118]] 17:24, 4 January 2019 (UTC) | ||
:::How are stock markets even still legal? This is insane! [[User:Fabian42|Fabian42]] ([[User talk:Fabian42|talk]]) 17:42, 4 January 2019 (UTC) | :::How are stock markets even still legal? This is insane! [[User:Fabian42|Fabian42]] ([[User talk:Fabian42|talk]]) 17:42, 4 January 2019 (UTC) | ||
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:::What you (and Ponytail, FWIW, given how muddled the analogy is of course) describe sounds more like selling put options than short selling. [[User:Stannius|Stannius]] ([[User talk:Stannius|talk]]) 19:10, 4 January 2019 (UTC) | :::What you (and Ponytail, FWIW, given how muddled the analogy is of course) describe sounds more like selling put options than short selling. [[User:Stannius|Stannius]] ([[User talk:Stannius|talk]]) 19:10, 4 January 2019 (UTC) | ||
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::It is not that hard to understand. Imagine you own 100 apple-shares and do not plan to sell them for the near future. You lend me these 100-shares for 2 weeks. I sell the 100 shares immediately. Now I have 2 weeks to re-buy them. If I’m lucky the price for these 100 shares will decrease somewhen during this 2 weeks. Imaging that I sold the shares for 200$ each, and could re-buy them for 170$: Then I made 30*100$=3000$. Of course you will get a fee for the borrowing. The 3000$-fee are my profit. | ::It is not that hard to understand. Imagine you own 100 apple-shares and do not plan to sell them for the near future. You lend me these 100-shares for 2 weeks. I sell the 100 shares immediately. Now I have 2 weeks to re-buy them. If I’m lucky the price for these 100 shares will decrease somewhen during this 2 weeks. Imaging that I sold the shares for 200$ each, and could re-buy them for 170$: Then I made 30*100$=3000$. Of course you will get a fee for the borrowing. The 3000$-fee are my profit. | ||
::The risk here is of course that the shares could increase in price during the 2 weeks – then I would be forced to rebuy them for more that I got AND have to pay you the fee. That’s the reason shorts are more dangerous then longs. --[[User:DaB.|DaB.]] ([[User talk:DaB.|talk]]) 17:36, 4 January 2019 (UTC) | ::The risk here is of course that the shares could increase in price during the 2 weeks – then I would be forced to rebuy them for more that I got AND have to pay you the fee. That’s the reason shorts are more dangerous then longs. --[[User:DaB.|DaB.]] ([[User talk:DaB.|talk]]) 17:36, 4 January 2019 (UTC) | ||
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::::It’s totally legal to sell something that you borrow. If I could not buy it back you and I will have a problem – so you do this kind of business only with people/firms with money. | ::::It’s totally legal to sell something that you borrow. If I could not buy it back you and I will have a problem – so you do this kind of business only with people/firms with money. | ||
::::But to show you something that IS crazy, there is also ''Naked short selling'' – that’s like short-selling on speed. With this kind of short-selling, I do not borrow anything. It works in this way: Today I sell you 100 apple-shares, which I do not have, for 200$. You have to pay me immediately, so I collect 100*200$=20,000$. I will deliver these shares when I have to, which is 1 or 2 days from now (depending on the market-place). So if I’m lucky and the price drops the next 1 or 2 days, then I make profit. For example if the apple-shares decrease again to 170$, then I make 100*(200$-170$)=3000$ profit. Some countries (but not the US AFAIK) forbid these kind of short-selling, after the last financial crisis. --[[User:DaB.|DaB.]] ([[User talk:DaB.|talk]]) 20:37, 4 January 2019 (UTC) | ::::But to show you something that IS crazy, there is also ''Naked short selling'' – that’s like short-selling on speed. With this kind of short-selling, I do not borrow anything. It works in this way: Today I sell you 100 apple-shares, which I do not have, for 200$. You have to pay me immediately, so I collect 100*200$=20,000$. I will deliver these shares when I have to, which is 1 or 2 days from now (depending on the market-place). So if I’m lucky and the price drops the next 1 or 2 days, then I make profit. For example if the apple-shares decrease again to 170$, then I make 100*(200$-170$)=3000$ profit. Some countries (but not the US AFAIK) forbid these kind of short-selling, after the last financial crisis. --[[User:DaB.|DaB.]] ([[User talk:DaB.|talk]]) 20:37, 4 January 2019 (UTC) | ||
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Short selling doesn't seem all that complicated. It's the night before black friday, and your friend has [hot new amazing toy] that they picked up a few months ago before it got popular. You ask if you can borrow it for a week. Then you go out the next morning and scalp it to a frustrated parent that is desperate to get it for their kid but the store is sold out. A week goes by, and you head to the store and pick one up now that they are back in stock and on sale, and give it back to your friend. Your friend has a toy, even if it's not exactly the same one, and the price difference between what you sold it for and what you paid for the new one gave you a bit of holiday spending money. The danger is if the toy doesn't get back in stock or the price goes up due to demand and you have to buy it for more than you sold it. [[User:Andyd273|Andyd273]] ([[User talk:Andyd273|talk]]) 17:45, 4 January 2019 (UTC) | Short selling doesn't seem all that complicated. It's the night before black friday, and your friend has [hot new amazing toy] that they picked up a few months ago before it got popular. You ask if you can borrow it for a week. Then you go out the next morning and scalp it to a frustrated parent that is desperate to get it for their kid but the store is sold out. A week goes by, and you head to the store and pick one up now that they are back in stock and on sale, and give it back to your friend. Your friend has a toy, even if it's not exactly the same one, and the price difference between what you sold it for and what you paid for the new one gave you a bit of holiday spending money. The danger is if the toy doesn't get back in stock or the price goes up due to demand and you have to buy it for more than you sold it. [[User:Andyd273|Andyd273]] ([[User talk:Andyd273|talk]]) 17:45, 4 January 2019 (UTC) | ||
It seems like the title text implies there are multiple witches involved. This should perhaps be mentioned in the explanation. [[Special:Contributions/108.162.241.202|108.162.241.202]] 18:04, 4 January 2019 (UTC) | It seems like the title text implies there are multiple witches involved. This should perhaps be mentioned in the explanation. [[Special:Contributions/108.162.241.202|108.162.241.202]] 18:04, 4 January 2019 (UTC) | ||
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:I believe the pun is related to how multiple people promising to win the auction is going to drive prices higher. If this is somehow related to some story with multiple witches, it's beyond my knowledge. It's entirely possible the witches are there only to connect the title text with the comic dialog. Also, I find it interesting that Cueball didn't actually ask Ponytail for her wisdom - he only made a comment which she then answered. [[User:Ianrbibtitlht|Ianrbibtitlht]] ([[User talk:Ianrbibtitlht|talk]]) 19:36, 4 January 2019 (UTC) | :I believe the pun is related to how multiple people promising to win the auction is going to drive prices higher. If this is somehow related to some story with multiple witches, it's beyond my knowledge. It's entirely possible the witches are there only to connect the title text with the comic dialog. Also, I find it interesting that Cueball didn't actually ask Ponytail for her wisdom - he only made a comment which she then answered. [[User:Ianrbibtitlht|Ianrbibtitlht]] ([[User talk:Ianrbibtitlht|talk]]) 19:36, 4 January 2019 (UTC) | ||
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someone takes !-> they believe !-> their strategy; 1 != 2; will (optative) -> shall (future); he -> who; witches -> witch's; would (desiderative) -> should (conditional) [[User:Lysdexia|Lysdexia]] ([[User talk:Lysdexia|talk]]) 02:38, 5 January 2019 (UTC) | someone takes !-> they believe !-> their strategy; 1 != 2; will (optative) -> shall (future); he -> who; witches -> witch's; would (desiderative) -> should (conditional) [[User:Lysdexia|Lysdexia]] ([[User talk:Lysdexia|talk]]) 02:38, 5 January 2019 (UTC) | ||
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