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Play *Jeopardy* at MarginalRevolution
...shorting requires a [margin] deposit at zero interest rate, that is the key here...
That's my email answer to the question I receive most frequently these days. Who can state the question?
Posted by Tyler Cowen on July 26, 2008 at 02:45 PM in Political Science | Permalink
Comments
Why isn't everyone who thinks that the high price of oil currently observed is due to a bubble putting their money where their mouths are by shorting the black gold?
Posted by: Ammianus at Jul 26, 2008 2:55:19 PM
Why at online betting markets such as Intrade do the implied probabilities of alternative outcomes, such as the identify of the next president, add to more than 100%?
Posted by: Richard Squire at Jul 26, 2008 3:26:56 PM
Perhaps the point is that short selling is more common when interest rates are low?
Posted by: stan at Jul 26, 2008 3:41:00 PM
and the required margin is the entire exposure, not some figure based on marking to market.
I think Richard Squire has it, and a special case is asking why one sees prices of a few cents per dollar for extremely unlikely events.
Posted by: jonm at Jul 26, 2008 3:46:51 PM
Is short-selling a factor in the current economic downturn?
Posted by: David at Jul 26, 2008 3:52:52 PM
Close Richard, but I think it's a simpler version: Why don't the combined probabilities of McCain and Obama to be President add up to 100% on Intrade?
Posted by: Joel W at Jul 26, 2008 4:00:24 PM
Who are three women who have never been in my kitchen?
Posted by: dan at Jul 26, 2008 4:42:04 PM
Even closer, Joel, but the actual question is:
Why are the probabilities of Clinton, Romney, Gore, Huckabee et al. to be their party's nominee (or even president) still so far from zero?
Posted by: A student of economics at Jul 26, 2008 4:44:02 PM
Why can we still have bubbles even if short selling is allowed?
Posted by: Keith at Jul 26, 2008 5:10:13 PM
What is, should I be wait longer before I enter the market/purchase a home?
Posted by: Shaun at Jul 26, 2008 5:15:26 PM
What is buying using FannieMae or FreddieMac?
Posted by: Matt at Jul 26, 2008 5:29:25 PM
you can still have bubbles because people like me don't have capital...
the fools have strong hand...with your pension money no less...
Posted by: c8to at Jul 26, 2008 5:31:55 PM
dan: Cleopatra, Nefertiti, & the Queen of Sheba.
Ammianus: Why no oil shorts? Smart money does not bet when the deck is loaded. There aint no "free" in the current market for oil futures. There are more shills and proposition players at the table than you can shake a stick at. Some of them will get theirs, and some won't. On the flipside, why don't you go long on the price of oil staying above $100 over the next couple of years? Let us know how you do, when you get your computer out of hock, that is.
Posted by: Jason Armstrong at Jul 26, 2008 5:38:41 PM
dan: Cleopatra, Nefertiti, & the Queen of Sheba.
Ammianus: Why no oil shorts? Smart money does not bet when the deck is loaded. There aint no "free" in the current market for oil futures. There are more shills and proposition players at the table than you can shake a stick at. Some of them will get theirs, and some won't. On the flipside, why don't you go long on the price of oil staying above $100 over the next couple of years? Let us know how you do, when you get your computer out of hock, that is.
Posted by: Jason Armstrong at Jul 26, 2008 5:39:47 PM
FYI most ISDA agreements specify interest on USD collateral at fed effective flat. That doesn't negate the original answer, but it might divide instutions & private individuals incentives.
Posted by: nick at Jul 26, 2008 6:04:42 PM
"the fools have strong hand...with your pension money no less..."
Best...line...ever.
Posted by: Keith at Jul 26, 2008 6:45:49 PM
Why does the human heart long for what it cannot have?
Posted by: tom at Jul 26, 2008 7:45:47 PM
I'll take "Why did SemGroup fail" for $1000 please.
(I mean in addition to the unpaid Hooters tabs)
Posted by: Climateer at Jul 26, 2008 8:11:09 PM
What does shorting require, and what is the key here?
Posted by: josh at Jul 26, 2008 8:28:13 PM
What is the air speed velocity of an unladen swallow?
Posted by: Please don't kill me at Jul 26, 2008 8:31:50 PM
African or European Swallow?
Posted by: Arty at Jul 26, 2008 8:58:40 PM
If speculators are the cause for high oil prices, rather than actual supply shortages, why are not more people selling short?
Posted by: DJB at Jul 26, 2008 9:46:17 PM
Don't the oil futures markets have symettrical margin requirements for both the shorts and the longs?
Posted by: stubydoo at Jul 26, 2008 10:54:49 PM
Why isn't naked shorting more prevalent?
Posted by: philosophymajor at Jul 26, 2008 11:02:30 PM
Oil (likely guess)
Presidential Futures (another great guess)
Housing (good application but doesn't quite seem to fit)
...but Josh, has the best question so far! Full Credit.
"What does shorting require, and what is the key here?"
Posted by: Jeff at Jul 27, 2008 12:53:10 AM
