Tuesday, January 13, 2009

Make Money Like Porsche

I saw a post on kottke.org a while back when Volkswagen became the largest company in the world by market capitalization. It piqued my interest, but I didn't know enough to look deeper. Turns out there's a fascinating story there, beginning with Porsche recognizing an opportunity to engineer a short squeeze and ending with the well-publicized suicide of Adolf Merckle. Here is a very lucid explanation of what happened.

2 comments:

Unknown said...

We learned about shorting stock in 7th grade as part of the "Wall St. Whiz Kids" group at my school, it's a great concept, and that's some brilliant maneuvering by Porsche.

Gotcha!

Duke said...

Yeah, I learned what a short was a while ago, but I didn't know that the deal begins by borrowing the shares. I always wondered where they got the shares in the first place, because it doesn't make any sense if you have to buy them. Everything has just fallen into place, and I'm once again (still?) enthralled by money.