Follow the money or not?

Soutra

Active member
#3
How does one get a short position or a bet on no deal?

Follow the money? View attachment 7666
Short selling -
You borrow, or take an option on some shares in a company.
You sell the shares at the going rate, knowing or hoping the shares will drop in value.
When the shares drop in value, you buy them back at the new price and return them to the owner, and pocket the difference.
It's risky and controversial because some traders have tried to drive the share price down by fake news and fake pr.
 

deganya

Active member
#4
Short selling -
You borrow, or take an option on some shares in a company.
You sell the shares at the going rate, knowing or hoping the shares will drop in value.
When the shares drop in value, you buy them back at the new price and return them to the owner, and pocket the difference.
It's risky and controversial because some traders have tried to drive the share price down by fake news and fake pr.
How do I buy shares in a 'no deal' scenario?
 

Soutra

Active member
#5
How do I buy shares in a 'no deal' scenario?
Find companies that have most to lose from a no deal brexit, and borrow shares in them today, and sell them..

Then sit back and hope that no deal happens, and when the shares drop by >15%, then buy them back.

Companies like Merc, BMW, Unilever, Diageo all may be badly affected.
 

1finny

Well-known member
#8
Quick maths (I'm sure someone can check)
If those 'shorting' achieve their 5% potential = £400m windfall

I'm sure the good folk of Middlesbrough are on this......
 

Soutra

Active member
#9
It's not worth it as if it goes the other way (ie. the shares go up in price) then there is an unlimited amount of debt that you will then be in.
That's what happened to Nick Leeson at Baring Bros. He kept doubling his stake to cover the losses, and doubling again, and again. His $10 million loss turned into a $1.4 billion hole that swallowed Baring.
 

Cardiffdaffs

Well-known member
#10
That's what happened to Nick Leeson at Baring Bros. He kept doubling his stake to cover the losses, and doubling again, and again. His $10 million loss turned into a $1.4 billion hole that swallowed Baring.
Yes he was “betting” on the currency markets, specifically yen but going up not down so not exactly shorting. He made a disastrous loss when the Kobe earthquake hit.
 

JackG

Active member
#11
I can understand how you would short 'no-deal'. I also understand how we can measure the extent of shorting going on. I'm much less convinced that we can ascribe the shorting to no deal rather than, say, covid. Hedge funds are not required to 'show their working' when making bets.
 
#12
That's what happened to Nick Leeson at Baring Bros. He kept doubling his stake to cover the losses, and doubling again, and again. His $10 million loss turned into a $1.4 billion hole that swallowed Baring.
Almost exactly like this except it was the complete opposite :/
It should be noted that Leeson and Leeson alone (with these reckless trades) was responsible for 10.2% of the entire profit Baring made in 1993. That's mind-blowing to me. A lot of people got incredibly rich from Leeson and then threw him under the proverbial bus.

He was not trading currency but arbing the Nikkei stock exchange. Taking advantage of the minute differences in price between Japanese and Singapore markets and the enviable advantages that Baring enjoyed when it came to trading. However his previous success caused him to grow reckless and he held the trades (which were supposed to be completed almost simultaneously) for longer periods hoping to capitalise on his "hunches" that had served him well previously. The Kobe earthquake struck whilst he was holding a trade and wrecked his position. He gallantly tried and failed to recover this position through doubling down and deception and obviously it spiraled out of control.
 

1finny

Well-known member
#13
I can understand how you would short 'no-deal'. I also understand how we can measure the extent of shorting going on. I'm much less convinced that we can ascribe the shorting to no deal rather than, say, covid. Hedge funds are not required to 'show their working' when making bets.
Agree there, and am much less persuaded that we are heading for a no deal on the basis of influential hedge fund managers.
However, if they have hedged certain companies which are ‘no deal’ sensitive there will be pressure of some sort on Ministers
 
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