'Short selling is a strategy for making money on stocks falling in price... An investor borrows a stock, sells it, and then buys the stock back to return it to the lender. Short sellers are wagering that the stock they’re shorting will drop in price. If this happens, they will get it back at a lower price and return it to the lender. The short’s profit is the diff in price between when the investor borrowed the stock and when they returned it."
@philip_cardella@RealJournalism
I know what it is. I don't have any idea why this is allowed. People with inside knowledge make fortunes. This was clearly revealed in "The Big Short". What a scam.
@lin11c@philip_cardella@RealJournalism it’s usually justified as a check on overhyped stocks. Trading on non public info is illegal, but short sellers usually do OSINT to find stocks in companies that are lying or overly optimistic about their performance. If enough investors are short a stock, it’s a signal to the market that the price is too high.
A lot of people are short DJT because the company produces nothing of value and is a sinkhole for cash. But that’s not why it’s there. It’s there so that the wealthy can “invest” in getting someone elected while evading campaign finance laws. If they collectively lose $6B it doesn’t matter, they would have donated that money to getting their grand dragon Manchurian candidate elected anyway. So the short selling may not work.
@ShiitakeToast@RealJournalism
Yes I know that's what is happening. That is why it should be illegal IMO. It is frequently abused and manipulated for profit with no value. To mention the 2008 housing crash again. For anyone to get filthy rich from inside information in an industry crash is deeply wrong. Taxpayers end up paying for this crap.
@lin11c@RealJournalism I think the short sellers in 2008 saw the crisis before the rest of us, and we probably should have listened to them.
I mean, if we had different leadership we could have quietly put in backstops, changed laws and procedures, and prepared for the crisis in advance. It’s not like we had too much housing, it was over leveraged.
With DJT it’s the same thing--there’s information out there that it’s a dogshit company and shouldn’t even be on the market. Short sellers make that very clear and anyone who ignores that is gambling on it anyway.
To be clear, I’m not a short seller (I don’t trade stocks). There is something icky about profiting from someone’s failure, too. I just think short selling is an incentive for investors to seek and out liars.
@ShiitakeToast@RealJournalism
Yes agree with all of this. It's just another way to manipulate the markets IMO. No different than a Congressman who sells his Boeing stock because he finds out before the general public about their horrible corruption and safety crimes. But these f*cks never go to prison. Just Martha Stewart. 🤬 I am vehemently against taxpayers bailing out any banks or financial firms. But we are told they are "too big to fail". Bullshit.
@ShiitakeToast@lin11c@RealJournalism I had a friend (in 2008) who was a daytrader. When she started complaining about a few things, I told her she would have to be trading short if she wanted to make money. (I didn't know what it was called and had to describe the process. But several things were tanking)
She was over leveraged and couldn't do it. Lost a ton.
@Ralph058@lin11c@RealJournalism short selling is extremely risky, especially for day traders, though. There’s an unlimited risk of loss. If the stock goes up instead of down, you’re in a bad position.
But I feel like that about debt in general. It’s like a gun. You don’t point a gun or a mortgage at anything you’re not willing to destroy.
@lin11c@philip_cardella@RealJournalism Shorting itself isn't dependent on insider knowledge. You might look at a share and decide, based on honest skill and judgement, that it looks cheap and will go up, so you buy. Or you might decide (as in this case) that it's only going down, so you short it.
@tokensane@philip_cardella@RealJournalism
True. But if you have inside knowledge that a whole sector or company is going to tank, there is virtually no risk to short it. You know who has this kind of information? Lot's of people in government including politicians.
@philip_cardella@lin11c@RealJournalism When you have a thinly traded stock with heavy shorting, it can easily become a Short Squeeze. Lots of people borrow the shares and sell them. Other speculators buy them up and then lend them out again. So now you have more shares outstanding than actually exist. The short sellers are legally required to buy back the shares whatever the price, but they can't get them, so the price goes up indefinitely and shorts go bankrupt. https://en.m.wikipedia.org/wiki/Short_squeeze
@tokensane@philip_cardella@lin11c@RealJournalism I think this is what the Reddit community did to GameStop. They noticed it was heavily shorted by the financial industry insiders, and they bought shares to drive up the price, finally selling and causing the industry insiders to lose a ton of money. Rich people get right pissed when regular dudes take their money. They’re used to ripping peasants off, not the other way around.
@dashrb@tokensane@philip_cardella@RealJournalism
I remember when that happened. It was pretty strange. I'm glad they stuck it to the financial grifters and made them bleed a bit if only for a few weeks.
@dashrb@philip_cardella@lin11c@RealJournalism That's right. So now Trump's company looks like it might go the same way. But if it happens it won't be much benefit to Trump. Regardless of the nominal value, if he decides to unload his shares the price will just collapse anyway. The only people who think there's any value in Truth Social are suckers.
@tokensane@dashrb@philip_cardella@RealJournalism
I read it's a way for billionaires to funnel lots of money to him legally. It's a money laundering scheme that never should have been allowed. Our government hasn't been doing its job for decades. Corruption everywhere. 🤬
@lin11c@tokensane@philip_cardella@RealJournalism this seems right (& scary) to me. It offers an easy way for supporters, domestic individuals, corporations, and foreign governments and their oligarchs, to launder money to him. There’s enough capital in the fascist countries to allow them to scratch each other’s backs.
They currently purchase real estate from each other, at huge markups.
@dashrb@lin11c@philip_cardella@RealJournalism Good point. Because how do you prove that the massive premium paid by a Panamanian company for 30% of Truth Social was a bribe and not an honest investment?
@tokensane@dashrb@philip_cardella@lin11c@RealJournalism He cannot sell shares for 6 months, which hopefully would be September or October. And by then it will be a tax write off, or SEC should have evidence of money laundering.
@Runyan50@tokensane@philip_cardella@lin11c@RealJournalism evidence is a long way from enforcement. I used to think that people/companies will try to avoid doing illegal things. Now I realize it’s just another cost/benefit analysis. And when the fascists are in charge, they look out for their own.
If the propaganda works, & he gets elected, I think most/all of the legal actions against him will simply disappear.
@Wen@RealJournalism
But they aren't really betting when they information that the stock is going to tank. Does anyone believe that billionaires these days don't have information and heads ups that us regular folks don't? Give me a break.
Ahh now that is unlawful. Insider trading. But those nice people in the markets would never do that would they children? But you asked how money gets made (and lost).
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