A hypothetical re. 1929

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ed
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A hypothetical re. 1929

Post by ed » Mon Apr 08, 2019 11:36 am

It is now October 1, 1929 and you know the crash is coming. You have some loot, not JP Morgan loot but "enough" to have invested.

What do you do?
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Anaxagoras
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Re: A hypothetical re. 1929

Post by Anaxagoras » Mon Apr 08, 2019 12:54 pm

Sell long positions, buy short positions.
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ed
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Re: A hypothetical re. 1929

Post by ed » Mon Apr 08, 2019 1:00 pm

Not sure that would work. But your plot would be to play the market?
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Re: A hypothetical re. 1929

Post by Anaxagoras » Mon Apr 08, 2019 1:05 pm

You could just sell everything and hold cash until prices bottom out, then buy at the bottom. But short selling would allow you to make money on the way down too.
A fool thinks himself to be wise, but a wise man knows himself to be a fool.
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Re: A hypothetical re. 1929

Post by ed » Mon Apr 08, 2019 1:17 pm

Wouldn't the funding for the shorting come from a bank? Or would you put up the cash? And deposit it at a .... bank?

Hmmmm .... I smell apple selling on a streetcorner.
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Re: A hypothetical re. 1929

Post by ed » Mon Apr 08, 2019 1:23 pm

I'd think about a company like Krupp. Can't find the historical prices but I bet you could have gotten a board seat in 1932 for peanuts. Then ride it to 37/38 and bail.
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robinson
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Re: A hypothetical re. 1929

Post by robinson » Mon Apr 08, 2019 2:02 pm

You never know what's going to happen, then some shit happens nobody saw coming, then later somebody says they knew it was coming, then some new shit happens nobody saw coming, rinse and repeat

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ed
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Re: A hypothetical re. 1929

Post by ed » Mon Apr 08, 2019 2:15 pm

robinson wrote:
Mon Apr 08, 2019 2:02 pm
https://www.cnbc.com/id/27404980
Good catch.
Yeah ... Hollywood. Thats the ticket.
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Re: A hypothetical re. 1929

Post by Rob Lister » Mon Apr 08, 2019 2:19 pm

Sell my Apple stock.

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Re: A hypothetical re. 1929

Post by Anaxagoras » Mon Apr 08, 2019 3:08 pm

ed wrote:
Mon Apr 08, 2019 1:17 pm
Wouldn't the funding for the shorting come from a bank? Or would you put up the cash? And deposit it at a .... bank?

Hmmmm .... I smell apple selling on a streetcorner.
If you want to use leverage, sure, but you could short without leverage.

The finer points of how it works, I don't know, but the basic idea of a short sale is you borrow shares from somebody else, paying something for the privilege and promising to give them their shares back at some point in the future. You sell those shares at the current market price, hoping to be able to buy them back at a cheaper price in the future. Only if you use leverage, you would borrow money to short even more shares. This makes it even riskier, but potentially you could make even more money as a result. And you can use leverage going the other way too, on a long bet. All of this assumes there's someone willing to lend you the money and someone willing to lend you their shares. Of course you have to pay them something for the privilege.
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Nyarlathotep
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Re: A hypothetical re. 1929

Post by Nyarlathotep » Mon Apr 08, 2019 9:44 pm

Depends on my endgame, I guess.

Is the challenge here to get rich FROM the crash or am I playing the long game. Do I know everything the 2019 me knows or do I just know the crash is coming?
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Re: A hypothetical re. 1929

Post by Nyarlathotep » Mon Apr 08, 2019 9:49 pm

If it’s the long game and I have my current knowledge I am buying stock in a little start up called “International Business Machines” and holding that stock for a decade or three.

Otherwise, I don’t know
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shuize
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Re: A hypothetical re. 1929

Post by shuize » Wed Apr 10, 2019 8:19 pm

There are probably better stock examples, but thinking about the '30s, '40s and 50's, my first thought was "Coca Cola." My second thought was "Swiss Banks."

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Re: A hypothetical re. 1929

Post by Grammatron » Wed Apr 10, 2019 9:16 pm

What's the end goal though?

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Re: A hypothetical re. 1929

Post by ed » Wed Apr 10, 2019 9:44 pm

The end goal is to protect your wealth, that is the way I thought of it initially. But being able to get a controlling nterest in something like a film studio ... hmmmm or land on the strip in vegas ... hmmmm
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Re: A hypothetical re. 1929

Post by Grammatron » Wed Apr 10, 2019 9:49 pm

I think if you know exactly where the ceiling of specific company shares will be, then it's pretty straight forward.

Invest > Get liquid > Wait for crash > Buy the now-cheap land.