We had a discussion a couple months ago about VW stock. Betting against VW cost Adolf Merckle hundreds of millions of dollars last year and eventually destroyed his business empire. Yesterday, it cost him his life.
posted by joaquim on Jan 6, 2009 - 64 comments

Short selling is basically the practice of selling borrowed shares, with the intention of purchasing them back later at a lower price. It amounts to a placing a bet on the share value dropping, is a favoured move of hedge funds, and has been recently blamed for much of the current economic mayhem. However, when last Sunday Porsche tersely announced that, in addition to its 44% of Volkswagen's shares, it had secured 31% through cash-settled call options, the invisible hand of the market gave those short-sellers an atomic wedgie: Since the German state of Lower Saxony holds just over 20% of VW, Porsche's disclosure meant that, in fact, there were only 5% of VW's shares left on the market, whereas traders were shorting for about 13% of those shares. This set off the "Mother of All Short Squeezes". [more inside]
posted by Skeptic on Oct 29, 2008 - 98 comments

Confused about what caused this whole credit crisis? Let me Paddy Hirsch from Marketplace explain it to you in this surprisingly entertaining and easy to understand video. While you're there, check out his explanation of short selling and credit default swaps. I wish this guy was my finance professor.
posted by JPowers on Oct 23, 2008 - 23 comments