116. Short Selling & Squeezing - Billionaire Feuds; Meme Stocks & Movies

Game Theory

In this episode, the hosts discuss short selling and short squeezes in the stock market.

They provide examples from movies like 'The Big Short' and 'Casino Royale' to explain the concept of short selling. They also explain the mechanics of short selling, including opening a brokerage account, borrowing stocks, and monitoring account equity.

The hosts mention the GameStop short squeeze as an example of how short selling can backfire. They emphasize the potential for making a profit through short selling, but also the risks involved. In this conversation, the hosts discuss the real-life example of short squeezing in the case of Herbalife and the famous battle between Bill Ackman and Carl Icahn.

They explain the concept of short selling and short squeezes, highlighting the risks and complexities involved. They also touch on the role of activist investors and the moral implications of short selling.

The hosts emphasize the excitement and addictive nature of short squeezing, but caution against the high risks involved. They conclude by discussing the historical origins of short selling and its impact on financial crises.

Short selling involves betting against a stock and profiting from its decline in value.

IN THIS EPISODE:

The mechanics of short selling include opening a brokerage account, borrowing stocks, and monitoring account equity.

Short selling can be profitable, but it also carries risks and can backfire, as seen in the GameStop short squeeze.

Movies like 'The Big Short' and 'Casino Royale' provide examples of short selling in different contexts. Short squeezing involves betting against a stock and profiting from its increase in value, often driven by investor behavior.

Short selling is a risky and complex practice that can have significant consequences for both short sellers and the companies involved.

Activist investors play a role in short squeezes by buying stakes in companies and attempting to change their direction or value.

Short selling has a long history, dating back to the 17th century, and has been associated with financial crises throughout history.

While short squeezing can be exciting, it is important to understand the risks and complexities involved before getting involved in such practices.

Chapters

00:00 Introduction and Haircut News

03:12 Discussion on Summer Weather

06:48 Introduction to Short Selling and 'The Big Short'

10:08 Short Selling in 'Casino Royale'

15:18 Mechanics of Short Selling

19:10 Short Selling Strategies and Risks

21:47 GameStop Short Squeeze

25:58 Understanding Short Selling and Short Squeezes

28:30 The Fundamentals of Stock Behavior

31:51 The Mechanics of a Short Squeeze

39:14 The Role of Company Success in Short Squeezes

47:20 The Historical Origins of Short Selling