[ExI] stossel on optimism

spike spike66 at att.net
Sun Jan 8 18:36:35 UTC 2012

-----Original Message-----
From: extropy-chat-bounces at lists.extropy.org
[mailto:extropy-chat-bounces at lists.extropy.org] On Behalf Of Kelly Anderson

>...I had a friend who invested using a rather complex scheme of selling
both short and long at the same time and allowing other people to bet
against each other using stocks he actually owned. I never could completely
wrap my head around it, so I would never make that kind of investment. I
hope he isn't sorry some day that the hole in his scheme isn't exposed, and
it almost has to be there. Of course, he is pitting two greedy investors
against each other, so maybe he'll always win... who knows? It sounded like
he had made himself into the house.  -Kelly

Kelly this sort of thing can be exploited profitably as we have seen in
Ideas Futures.  It is possible to short sell both sides of a two player
game, and you are assured of making a profit.  The loser (the guy who bet
against the winner) must buy shares to cover his shorts.

For instance, a political example would be the 2000 US election between Bush
and Gore.  For whatever reason, we saw people buying above any logical price
the shares of their favorite candidate.  For instance, two days before the
election, Bush-wins shares were going for 51 cents and the Gore-wins shares
for about 52.  So an investor could buy no-Bushes for 49 cents and no-Gores
for 48 cents.  At least one of those guys would hafta lose, ja?  So for 97
cents invested, one or the other (the no-Bush or the no-Gore) must pay back
a dollar.  In the unlikely event that a third guy won, such as a bomb goes
off at a Bush-Gore debate, slaying both candidates, or that both Bush and
Gore were caught colluding with the mafia or the commies the day before the
election so that both lost, then the 97 cent investment would pay two bucks.

What I learned from playing Ideas Futures with play money is that every
possible derivative that we created there, and every possible short sale of
any indefinite length or any contract can be derived from existing stock
trades.  If anyone is willing to spend their life doing that, there is real
money to be made, perfectly legally and legitimately, and certainly plenty
more to be made illegitimately and unethically, as we have seen with tragic


More information about the extropy-chat mailing list