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Shorting stocks (make money when stocks go down)

Started by Wartrqx [2272045] on in Stock Market.

45 replies · 4k views · thread synced · 3 days ago · View on torn.com

Posts archived: 46 / 46 posts (100%) · the total is Torn's reply count + the opening post at the last fetch

FlamingCacti [2605077] · #41 · edited
Good idea, obviously there needs to be some limitation however.

Let's say I own 100mill worth of stock in the market overall. 100mill of my own money invested, right?

One day, I want to go short on a particular stock. How much of that stock shall I be permitted to loan? 100mil worth.

Equal to the dollar amount of stocks I have invested elsewhere in the market.

Positive stock market equity required. You can't loan more $ worth of stocks than you own.

Assets - Liabilities = Equity

$_Stocks_Owned - $_Stocks_Loaned > 0

This prevents someone from losing more than they own within the stock market. Prevents them going below zero, because then the debt would have to pass on to Duke for collection.
Wartrqx [2272045] · #42
In my opinion, knowing that Chedburn probably wants more ways to get money out the economy, allowing for some debt could work. Shorting comes with enormous risk, being that there is no limit to how much you can lose. Maybe putting in place something that automatically cuts your loses if you lose twice your investment? So lose your investment plus the same amount in debt. Could be a good way to prevent speculation?
Penicillin [1517799] Committee Committee · #46
This suggestion has come up about every six months for the last 10 years. Shorting stocks is more complicated then it seems. Technically, you would need to borrow the shares from another investor and pay them interest. Skip that step? Who pays the dividend? Should Ched pay it twice? When you start to pull the threads, it gets a lot more complicated than "I want to bet it goes down". What happens when someone shorts something them logs out for a long period of time? Stocks irl can go to zero (that doesn't happen in Torn), but for shorted stocks, the loss is potentially unlimited.

In the end, shorting has several nuances and, this is a general statement, but the players of Torn are not all that smart. They just won't understand it.