posted on Feb, 11 2016 @ 08:21 AM
No, that was not a catchy title to draw you in to a thread explaining what short selling
is in the finance world - I literally don't understand
it and I'm asking.
I'm asking because, as many people know, George Soros is one of the richest people on the planet, and after reading his Wiki page, I found that he
made something to the tune of $1 billion off of a short sale back in the early 90's, during the "Black Wednesday UK Crisis":
He is known as "The Man Who Broke the Bank of England" because of his short sale of US$10 billion worth of pounds, making him a profit of $1 billion
during the 1992 Black Wednesday UK currency crisis. Soros is one of the 30 richest people in the world.
I wanted to try to figure out what a short is, remember that movie 'The Big Short" about the '08 financial crisis? Were the bailouts a "short sale"
for someone as well? Wiki on Short Selling: Wiki
Even with this handy-dandy diagram I can't quite envision how this works.
I feel like I can almost
grasp what this concept is - like you are making a deal before you have the money to cover it, then once the
transaction goes through you can take money from your profits to pay for the initial deal (which you technically already made, but didn't have the
money to cover it at the time). Or am I totally mistaken?
Can anyone help? Thanks everyone in advance, looking forward to learning something new and talking about these tricky little money games
P.S. I also need to do some more reading on Black Wednesday. If any of our members from UK can provide any personal comments about that event that
too would be a great addition to the thread.
edit on 11-2-2016 by FamCore because: (no reason given)