Could somebody please explain what happened there, "shortening the stocks" etc, especially in the last season with Kennedy who joined the pact... Don't understand the concept,
thanks in advance
That was real? I saw that movie, I thought it was bullsh*t
Shorting stock is buying stock cheap, keeping it or loaning the shares to another person and then selling them later for a profit. The idea with the Kennedy arc is that he's on a board of the grain company, it's stocks were low, and they would make money if they bought stock, once prohibition ended. It's just a fictitious version of him for the creative license playing off the rumors that Kennedy made money off of bootlegging.
shareShorting stock is actually selling stock you don't own. The purpose - at least in this case - is similar to what you describe, but the other way 'round: what you're trying to do is first sell stock dear, then later buy it cheap.
And it more directly plays off the notion (largely accepted as true, unlike the bootlegging) that Kennedy made money off of stock market manipulation.
Everyone knows Kennedy was a bootlegger. Come on!?!?
shareLook at it this way, when you purchase a stock, you pay the fair market value to the current owner of the stock. The stock value will rise or fall based on what people are willing to pay to own that stock.
When you short sale a stock, you are actually borrowing the stock (from investors and investment firms, etc) and selling it at the current market rate to new investors. At some point in the future, you will need to pay back the stock loan. Not the value borrowed, but the number of shares of stock borrowed.
Ex: Nucky shorts Mayflower by borrowing 100,000 shares at $33/share. So essentially he made $3,300,000, but he will need to pay back the 100,000 shares he borrowed. Nucky then buys 100,000 shares of Mayflower when the market value is $3 to pay back his shares. He spent $300,000 to get them, but his profit is $3,000,000.
In the show, when Nucky begins shorting Mayflower, the large amount of the shorting causes the investors of Mayflower to get nervous and they start selling the stock. The sell off causes the value of the stock to tumble. The board of Mayflower (Kennedy and the others) also get nervous and start selling causing the huge tumble of value. Nucky satisfied his short sale of the stock by rebuying the stocks he needs to repay at the lowest value.
It doesn't always happen that way. If you short and the value of the stock increases, you end up having to re-purchase the stocks for more than if you had simply purchased the stocks directly to satisfy the loan.
I'm sorry I don't speak computer-ebonics, please type in English.
Thanks for the explanation, exciting but not easy! 😅
That was real? I saw that movie, I thought it was bullsh*t