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(NPR)   So what really happened at the end of 'Trading Places'? It's a bit more complicated than you think   (npr.org) divider line 144
    More: Interesting, Trading Places, Dukes, trading floors, advance copy, Commodities market, trading  
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16169 clicks; posted to Business » on 13 Jul 2013 at 4:27 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-07-12 11:45:09 PM
Sell short.  Buy to cover.  It's still buy low, sell high.  Just in a different order.
 
2013-07-12 11:55:45 PM
Looking good, Billy Ray!
 
2013-07-12 11:56:12 PM
That might actually be the clearest and most concise explanation of that sequence I've ever read.
 
2013-07-13 12:04:43 AM
What's not to understand?  the whole scheme was laid out.
 
2013-07-13 12:12:41 AM

drewbob21: Sell short.  Buy to cover.  It's still buy low, sell high.  Just in a different order.


I thought this was pretty obvious.  I admit, I didn't understand it when I saw it in 1983 (saw it at the drive-in when I was 17), but after a high school business ed class my senior year (where my teacher made a point of saying Bulls Win, Bears Win, Pigs Lose), I understood the concept.
 
2013-07-13 12:15:08 AM
One interesting kicker to the story: Trading commodities on inside information obtained from the government wasn't actually illegal when the movie came out, but it's illegal now. It was banned in the 2010 finance-overhaul law, under a special provision often referred to as the Eddie Murphy rule.

It took them until 2010 to begin to address this.

Rich people play us for suckers every minute of every day.
 
2013-07-13 12:26:32 AM

Cerebral Knievel: What's not to understand?  the whole scheme was laid out.


Not only that but Ralph Bellamy provides a primer on commodity trading to Eddy Murphy early in the movie.
 
2013-07-13 12:29:04 AM
...and yet casino gambling is illegal in most states.
 
2013-07-13 12:41:32 AM
The Eddy Murphy Rule:
1- I have the ice cream
2- You didn't get none
3- 'Cause you are on the welfare
4- You can't afford it
5- And your father's an alcoholic
 
2013-07-13 01:00:42 AM
Beaks got farked by a gorilla.  How complicated is that?
 
2013-07-13 01:05:02 AM

Notabunny: The Eddy Murphy Rule:
1- I have the ice cream
2- You didn't get none
3- 'Cause you are on the welfare
4- You can't afford it
5- And your father's an alcoholic


I want the knife?
 
2013-07-13 01:22:52 AM

Lando Lincoln: Rich people play us for suckers every minute of every day.


Feudalism never really died. But, you know that.
 
2013-07-13 01:44:14 AM

Mentat: Beaks got farked by a gorilla.  How complicated is that?


Knowing Beeks, how he felt about it was.
 
2013-07-13 02:14:52 AM
The thing is, as soon as Winthorpe says "Sell 30 April at 142!", the price starts falling. Even though the overwhelming action is still by the buyers.

So it still doesn't quite make sense. Here, have some O.J.

fc09.deviantart.net
 
2013-07-13 02:28:41 AM

LordOfThePings: Here, have some O.J.


That's probably Russian Dressing. Nom nom nom
 
2013-07-13 02:54:51 AM

Cerebral Knievel:

What's not to understand?  the whole scheme was laid out.
Yeah, really.  I don't see the "confusion" in the first place.
 
2013-07-13 04:49:38 AM
I figured out most of that years ago, after frequent rewatchings on basic cable.  Just a few terms remained arcane and unknowable, but I got the basic idea right away.

"One interesting kicker to the story: Trading commodities on inside information obtained from the government wasn't actually illegal when the movie came out, but it's illegal now. It was banned in the 2010 finance-overhaul law,"

Now THAT is a surprise.
 
2013-07-13 04:58:08 AM
Okay, now explain what happened at the end of Brewster's Millions.
 
2013-07-13 05:25:00 AM
"...and she stepped on the ball."
 
2013-07-13 05:48:46 AM
I don't know a damn thing about the stock market, but I understood exactly what was going on in that scene. If you needed that explained to you then you probably should stop watching movies and read a few books.
 
2013-07-13 06:01:57 AM

Lando Lincoln: Rich people play us for suckers every minute of every day.


Technically speaking, rich people often play other rich people for suckers, especially unsophisticated managers of institutional wealth.
 
2013-07-13 06:14:28 AM
elliottwave.info

"Turn those machines back on! TURN THOSE MACHINES BACK ON!"


/Murphy's best movie. Period.
//Rest in peace, Don Ameche. And thank you.
 
2013-07-13 06:29:23 AM

Lando Lincoln: One interesting kicker to the story: Trading commodities on inside information obtained from the government wasn't actually illegal when the movie came out, but it's illegal now. It was banned in the 2010 finance-overhaul law, under a special provision often referred to as the Eddie Murphy rule.

It took them until 2010 to begin to address this.

Rich people play us for suckers every minute of every day.


Eddie Murphy Rule:  you will begin your career by being edgy and controversial and gradually become more and more mainstream.
 
2013-07-13 06:38:49 AM

HighOnCraic: Eddie Murphy Rule: you will begin your career by being edgy and controversial and gradually become more and more mainstream.


I thought that was the Ice Cube rule.
 
2013-07-13 06:40:47 AM
I've done some investing in the stock market.  The simplest rule is the best: Buy Low, Sell High.  For example:

People see that gas prices are going up at the pump, so they buy BP stock. The stock is already high, but they buy it anyways.  BP causes an oil spill in the Gulf of Mexico.  BP stock drops.  Those people who bought stock when the price of gas and the pump was $3.50 now have a bunch of BP stock that is less than a quarter of what they bought it for.  They sell, don't get way they paid in, get pissed.  Me, I see BP causes an oil spill and their stock is dropping.  The more negative the story gets, the lower the stock prices drop. I wait.  As soon as I see the stock start to rise again, I buy.  Sell when either the stock hits a five year high or when another good company farks up and their stock becomes the value of toilet paper.  This means that I take the stocks I bought cheap, sell for a huge profit and buy the shares of another company dirt cheap, and with more money (due to that profit), allowing me to pick up more stocks so when I sell at a higher profit, there's a ton of more money out there.  I did this the first time in 2006 when Jet Blue had a plane crash that damaged their stock.

There is risk involved, of course. If a company goes bankrupt, that stock becomes worthless.  But also consider some of these companies.  If Pepsi sent out a 12 pack where each can contained a dead drowned rat, Pepsi stock would reach an all time low, but the company wouldn't go bankrupt or get bought out.  Exxon and BP, they've caused massive oil spills and both are still in business and aren't going anywhere.
 
2013-07-13 06:43:59 AM
Remaining questions.

What was the money for (ie: Jamie Lee Curtis' Hooker savings)? Is it to get credit so they can sell short? If so, who gives them the credit and how does everyone on the floor know they are good for it? Can anyone just walk onto the trading floor and start selling any amount of whatever?

Everyone yells and writes things on little pieces of paper and then throw the paper on the floor. How are any of those trades trackable or enforceable?
 
2013-07-13 06:48:16 AM
It's the "selling before buying I didn't understand". My brother, who was doing a banking degree explained that you could do that and it all made sense.

If you can't follow Trading Places, best not go near Primer.
 
2013-07-13 06:58:08 AM
It's not complicated at all. At the end of "Trading Places" they all decided to have both the lobster and the cracked crab while relaxing somewhere in the Caribbean presumably.
 
2013-07-13 07:00:25 AM
i loved that movie when i was a kid.  lots of pretty ladies showed their boobies in that movie.  i didn't even watch the other parts.
 
2013-07-13 07:00:38 AM

salvador.hardin: Remaining questions.

What was the money for (ie: Jamie Lee Curtis' Hooker savings)? Is it to get credit so they can sell short? If so, who gives them the credit and how does everyone on the floor know they are good for it? Can anyone just walk onto the trading floor and start selling any amount of whatever?

Everyone yells and writes things on little pieces of paper and then throw the paper on the floor. How are any of those trades trackable or enforceable?


You usually need 10% down to trade on margin.  So if they scraped together $250k they could leverage $2.5 million to start.  I think the movie showing her giving them the money just before trading opened was done just to keep things simple for the viewer, they would have had to put the money on deposit before they began trading.  Unless Lewis knew somebody who would back him so long as he had the cash that morning.
 
2013-07-13 07:05:00 AM

Ishkur: HighOnCraic: Eddie Murphy Rule: you will begin your career by being edgy and controversial and gradually become more and more mainstream.

I thought that was the Ice Cube rule.


Murphy did it first (although Ice Cube's slide from gangsta rapper to cuddly dad was probably more dramatic).
 
2013-07-13 07:07:57 AM
Jamie Lee Curtis's tits.

/that is all
 
2013-07-13 07:12:02 AM

salvador.hardin: How are any of those trades trackable or enforceable?


Those slips of paper are just to keep track of things. Some are orders that the traders get from runners who work for them who would run to the phones. Those just tell them how much to buy or sell at what price. Some were notes kept by the actual floor traders. The actual trades were recorded on cards that were then time stamped and sent from the particular trading post to where they were recorded again and processed. The process was not particularly efficient yet it worked very fast, as changes in the various prices on the floor would show up on the ticker within a few minutes.
 
2013-07-13 07:18:41 AM
... and if you saw "Coming To America", Eddie Murphy's character drops off an unwanted wad of cash to 2 bums on a park bench. Guess who the bums were?
 
2013-07-13 07:21:57 AM
"Yeah,..."
 
2013-07-13 07:22:01 AM

farkeruk: It's the "selling before buying I didn't understand". My brother, who was doing a banking degree explained that you could do that and it all made sense.

If you can't follow Trading Places, best not go near Primer.


I've had it explained to be before.  It works like this:

A  way of doing this would be me having a friend who is a giant sci-fi and fantasy nerd.  My step-mom goes through her storage shed filled with toys that her kids had and never got rid of and I find a vintage G.I. Joe USS Flagg, 90% complete.  I see it and ask my step mom if she'd be willing to sell me the U.S.S. Flagg.  She asks for how much.  I call up my nerd buddy, tell him what I have and offer it to him today only for $400.  It's a once in a life time opportunity, and he says "Hell yeah!"  So I make arrangements to make delivery at his place today and he tells me that he's heading to the bank.  I return to my step mom and I offer her $150.  She takes it.  I take the U.S.S. Flagg and sell it to my friend who hands me the $400 cash.

Now, I've know people who do this same thing, but with cars and real estate.  They'll go to unadvertised auctions see cars and get buyers lined up.  They'll buy a car for $500 and sell it that day to a buyer for $2000.  If I walk into an antique toy store 50 miles away and I see a toy that a nerd friend of mine wants, I'll take a pic of they toy and tell him it's $X (X = price of toy, plus gas, plus profit).  If he agrees to that price that day I'll buy it.  If he won't I'll move on.  Some times he'll say no to that, but ask if they have something else.  He knows I'm jacking up the price to make a profit, but he also knows that I won't tell him where I'm at so it's ether take my offer or do without.
 
2013-07-13 07:31:27 AM

Dr.Zom: "...and she stepped on the ball."


Ghastly
 
2013-07-13 07:39:59 AM
Actually, it was a movie and nothing really happened. It was pretend. Actors acting.
 
2013-07-13 07:53:57 AM

NewportBarGuy: Looking good, Billy Ray!


Feeling good, Louis!
 
2013-07-13 07:59:58 AM

Great Janitor: I've done some investing in the stock market.  The simplest rule is the best: Buy Low, Sell High.  For example:

People see that gas prices are going up at the pump, so they buy BP stock. The stock is already high, but they buy it anyways.  BP causes an oil spill in the Gulf of Mexico.  BP stock drops.  Those people who bought stock when the price of gas and the pump was $3.50 now have a bunch of BP stock that is less than a quarter of what they bought it for.  They sell, don't get way they paid in, get pissed.  Me, I see BP causes an oil spill and their stock is dropping.  The more negative the story gets, the lower the stock prices drop. I wait.  As soon as I see the stock start to rise again, I buy.  Sell when either the stock hits a five year high or when another good company farks up and their stock becomes the value of toilet paper.  This means that I take the stocks I bought cheap, sell for a huge profit and buy the shares of another company dirt cheap, and with more money (due to that profit), allowing me to pick up more stocks so when I sell at a higher profit, there's a ton of more money out there.  I did this the first time in 2006 when Jet Blue had a plane crash that damaged their stock.

There is risk involved, of course. If a company goes bankrupt, that stock becomes worthless.  But also consider some of these companies.  If Pepsi sent out a 12 pack where each can contained a dead drowned rat, Pepsi stock would reach an all time low, but the company wouldn't go bankrupt or get bought out.  Exxon and BP, they've caused massive oil spills and both are still in business and aren't going anywhere.


I don't know whether to laugh with you or at you. I get the feeling you're trolling yourself.
 
2013-07-13 08:03:10 AM
I misread the headline as Trading Spaces and thought "Well, that's easy. Usually the rooms are painted in time but the design is hit or miss. There was that one time the designer put hay on all the walls and TLC got sued. What's so complicated about that?"

/it's early.
 
2013-07-13 08:09:11 AM
Gorilla Rape.

That's what happened at the end of Trading Places.
 
2013-07-13 08:12:36 AM

Great Janitor: I've done some investing in the stock market.  The simplest rule is the best: Buy Low, Sell High.


THIS.

When the stock market tanked in 2007, people were pulling out.  I and others were putting in as much as we could.  Did I lose alot in my 401K?  Sure.  But I wasn't planning on retiring that year.  I'm 20 years away.  Look at the market now.  It hit 15K last week, and continues to hover around that mark.

My finance manager told me (paraphrasing)  "you can try and play the stock market with your IRA's, 401K, etc, but if you are wrong, you will lose more than if you just keep your money in....everyone who pulled their money out the day after the top 5 days the stock market tanked, did worse then the people who kept their money in, and rode it out."
 
2013-07-13 08:17:46 AM
So instead of naming a law that makes it illegal to take government data to manipulate the commodities markets after the two old white dudes, the actual antagonists in the movie, they name it after after the only black man is the movie.
 
2013-07-13 08:18:07 AM
Next up: so why did Jamie Lee Curtis need to show her fabulous boobs in Trading Places?
 
2013-07-13 08:18:19 AM
It's not more complicated than I think; it's exactly what I think.
 
2013-07-13 08:18:26 AM
The reality of that movie is that insider trading CAN pay off...
 
2013-07-13 08:20:29 AM

Great Janitor: I see a toy that a nerd friend of mine wants, I'll take a pic of they toy and tell him it's $X (X = price of toy, plus gas, plus profit).  ... he also knows that I won't tell him where I'm at


Do you know what's in your EXIF data?

/Send me a pick with your iPhone, and I know EXACTLY where you're at.

mesmer242: I misread the headline as Trading Spaces and thought "Well, that's easy. Usually the rooms are painted in time but the design is hit or miss. There was that one time the designer put hay on all the walls and TLC got sued. What's so complicated about that?"

/it's early.


RIGHT THERE WITH YA!

/Also apparently the first host was a total douchnozzle.
//And that TV 'tray' hanging from the ceiling? It fell, broke the tv, so the owners had to buy a new tv.  In the wrap up they said "and the folks loved the new design so much they bought a new tv!"
///I think I still have nightmares about that 'living' moss headboard...
 
2013-07-13 08:25:20 AM

HotIgneous Intruder: Actually, it was a movie and nothing really happened. It was pretend. Actors acting.


No, no, no, it's real.  It is very real, because in Coming to America the prince gives his bank roll to the down and out Duke brothers.  Also, no one questioned the logic behind Jamie Lee Curtis going from hooker to rich guy's wife like they did when Julia Roberts did it.  Now that's real.
 
2013-07-13 08:25:38 AM

LordOfThePings: The thing is, as soon as Winthorpe says "Sell 30 April at 142!", the price starts falling. Even though the overwhelming action is still by the buyers.


If there is an offer in the market at 142, and somebody accepts that offer, the market price by definition is 142. Importantly, it will remain at exactly 142 as long as Winthorpe is willing to sell at 142 and others are willing to buy at 142 -- which they are, because the Dukes have told their man to buy at any price and everybody else is following the Dukes.

farkeruk: It's the "selling before buying I didn't understand". My brother, who was doing a banking degree explained that you could do that and it all made sense.


The subtle point that many miss is that they are trading commodities futures contracts, not stocks, which trips up even some financially astute people who understand short selling. For example, Great Janitor's explanation above is a very good explanation of how short selling works, i.e. sell something you don't have, buy it cheaper before you have to fulfill delivery. But that's not what's going on here.

The way to think about what's going on here, by contrast, is that they are buying and selling promises, not OJ. Winthorpe is promising to deliver 30 "contracts worth" of OJ in April for 142 per contract. The buyer is promising to take delivery of the same. Unlike with stocks, Winthorpe isn't "selling short" in the classic sense, i.e. selling something he doesn't have and has to buy later; he is selling something he does have: an actual contract (promise) to deliver.

However, the twist is that neither party has any intention of keeping the promise, i.e. of actually delivering/receiving tankers full of OJ in April. Instead, each intends to make an offsetting contract before the contract comes due. In reality, each is making a bet. The buyer is betting that sometime before April he can buy a Sell contract on to somebody else for more than 142, pocketing the difference. If the price goes down, he will have to cash out his contract for less than 142, losing the difference. (In practice, he never actually buys the OJ and then sells it on: the two contracts are "paired" and he receives or pays the difference.)

Winthorpe is making the opposite bet, i.e. that he can buy a contract for OJ (to match the delivery promise he has made) for less than 142, pair off the two contracts, and keep the difference. And of course, Winthorpe is right because he has inside information and is able to pair his contracts just minutes later. (Although commodities contracts can trade extremely quickly, it's also possible that in the real world each party would hold their contracts for days or weeks, waiting for the price to change by a few pennies.)

tl;dr: trading commodities is not quite the same as shorting stocks
 
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