And you thought your broker was slimy . . .
September 16, 2001 4:48 PM Subscribe
And you thought your broker was slimy . . .
This keeps getting worse. How intricate can this whole thing be? Is there an international law against vertically-integrated terrorism monopolies?
This keeps getting worse. How intricate can this whole thing be? Is there an international law against vertically-integrated terrorism monopolies?
When you short sell, you get the cash immediately for the sale of stocks at the current market price. Then by the end of the agreed time period you buy new shares and give them back to the broker that loaned them to you. The spread between the share prices at the end of the transaction is your profit. If the terrorists shorted stocks over the weekend or on Monday, they would not have to replace the stocks until after the attack.
posted by Lokheed at 5:18 PM on September 16, 2001
posted by Lokheed at 5:18 PM on September 16, 2001
When I first read this story (24 hours ago) I came to the same conclusion as ook, why did the stock drop before the attack.
posted by HoldenCaulfield at 5:19 PM on September 16, 2001
posted by HoldenCaulfield at 5:19 PM on September 16, 2001
Lokheed -- I know what a short sell is. (I've lost a good bit of money by doing it at the wrong time :)
My point is, the stock prices they mention in the article dropped before the attack, not after. So there's no way the attack could have caused this drop in share price. So there's no way foreknowledge of the attack would have helped anyone benefit from that particular price drop.
Now, don't get me wrong -- *all* stock prices are likely to drop considerably after the markets open, so short sells would've been a good financial strategy for anybody who knew what was coming... but this article as written doesn't make sense.
posted by ook at 5:36 PM on September 16, 2001
My point is, the stock prices they mention in the article dropped before the attack, not after. So there's no way the attack could have caused this drop in share price. So there's no way foreknowledge of the attack would have helped anyone benefit from that particular price drop.
Now, don't get me wrong -- *all* stock prices are likely to drop considerably after the markets open, so short sells would've been a good financial strategy for anybody who knew what was coming... but this article as written doesn't make sense.
posted by ook at 5:36 PM on September 16, 2001
My point is, the stock prices they mention in the article dropped before the attack, not after.
STARTED to drop before, probably will continue after when the market reopens tomorrow.
The thing is, when stocks are suddenly being shorted, that catches the attention of other people, who have learned that it often signals a future drop in stock price known to (or expected by) the unknown shorters, so they sell their shares, and the more shares that are sold, without an increase in demand for the stock, the lower the price goes.
posted by rushmc at 5:53 PM on September 16, 2001
STARTED to drop before, probably will continue after when the market reopens tomorrow.
The thing is, when stocks are suddenly being shorted, that catches the attention of other people, who have learned that it often signals a future drop in stock price known to (or expected by) the unknown shorters, so they sell their shares, and the more shares that are sold, without an increase in demand for the stock, the lower the price goes.
posted by rushmc at 5:53 PM on September 16, 2001
The point the article is trying to make about the stock price falling before the attacks is that there was so much short selling, that it brought the prices down even before the attacks. Stock prices go up and down based upon whether people are buying or selling. If there is a lot of selling, then the price will drop. These folks were selling even as the price was falling. Meaning, they were expecting it to go down even further.
posted by jgilliam at 5:57 PM on September 16, 2001
posted by jgilliam at 5:57 PM on September 16, 2001
Tomorrow is going to be a very interesting day... All week a lot of people have been feeling that the economy is the other shoe.
posted by kfury at 6:17 PM on September 16, 2001
posted by kfury at 6:17 PM on September 16, 2001
Extensive short selling can push a stock down all by itself.
posted by Steven Den Beste at 6:22 PM on September 16, 2001
posted by Steven Den Beste at 6:22 PM on September 16, 2001
I wouldn't mind shorting some stock in al-Qaeda round about now. The CEO's strategies seem a trifle reckless and longterm outlook for the brand doesn't look too promising. Oops, hang on.. fool me, unless they trade grotes under a buttonwood tree Kabul doesn't appear to have much of a stock exchange. Or anything else for that matter..
posted by Kino at 7:11 PM on September 16, 2001
posted by Kino at 7:11 PM on September 16, 2001
rushmc, jgilliam, steven: I see. That does make sense. But -- if we're assuming short sales on such a large scale that it would drive down the price all by itself, then how is that "profiting from the WTC attacks"? Wouldn't that just be an everyday, run-of-the-mill market manipulation?
I'm not trying to nitpick... it just seems like large-scale shorting -- of insurance companies, no less -- would be a really stupid thing to do if you were in any way involved in a terrorist attack (because it would immediately draw attention of exactly this sort). Much smarter to spread a lot of shorts around in completely unrelated industries, on the assumption that everything will drop -- enough to make a profit but not enough to draw attention to yourself...
Far be it from me to imply that someone who think it's a good idea to crash passenger planes into high-rise buildings is going to be a rational thinker, of course :)
posted by ook at 7:15 PM on September 16, 2001
I'm not trying to nitpick... it just seems like large-scale shorting -- of insurance companies, no less -- would be a really stupid thing to do if you were in any way involved in a terrorist attack (because it would immediately draw attention of exactly this sort). Much smarter to spread a lot of shorts around in completely unrelated industries, on the assumption that everything will drop -- enough to make a profit but not enough to draw attention to yourself...
Far be it from me to imply that someone who think it's a good idea to crash passenger planes into high-rise buildings is going to be a rational thinker, of course :)
posted by ook at 7:15 PM on September 16, 2001
Short selling on a mass scale in large quantities isn't a guarantee of driving down stocks alone or George Soros would be bankrupting large companies everyday of the week. The entire system would be a extremely vulnerable to anyone with a substantial amount of money and short selling would be the most active form of trade with the highest volume.
posted by Kino at 7:25 PM on September 16, 2001
posted by Kino at 7:25 PM on September 16, 2001
Double post. If it's true though, I hope they can track down some more people and shut off some of their funding.
posted by curiousg at 7:32 PM on September 16, 2001
posted by curiousg at 7:32 PM on September 16, 2001
The USA Today article curiousg links to makes a lot more sense: they're looking to see if any transactions were linked to Bin Laden. Which could have reaped huge profits. If they occurred.
In other words, it's a non-story: just investigators following up on a possible lead to see whether or not it goes anywhere.
posted by ook at 8:13 PM on September 16, 2001
In other words, it's a non-story: just investigators following up on a possible lead to see whether or not it goes anywhere.
posted by ook at 8:13 PM on September 16, 2001
Just watching CNBC now (from London), they had a couple people on who said there were suspicious short selling activities in European market Re-Insurance and Airline related stocks. Suspicious, meaning counter to the prevailing movement of the sectors. The Re-Insurance market was supposedly headed higher, looking stronger. But yes, these are just leads that are being investigated, nothing concrete.
posted by curiousg at 12:07 AM on September 17, 2001
posted by curiousg at 12:07 AM on September 17, 2001
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If someone with foreknowledge of the attack were looking to profit from it, wouldn't their short-sale be based on the idea that stock prices would drop *after* the attack?
Can somebody explain this to me?
posted by ook at 5:07 PM on September 16, 2001