Anyone understand "shortening"?

thesecretagent

Watched Casino Royale again last night and still don't understand Le Chiffe's "shortening" of the market. He phones his broker to sell another 2 million shares of Skyfleet, sabotages it, fails, then loses all his client's money - thus having to buy into the poker game to redeem his assets. I understand stocks - had he sabotaged another airline and kept his money in Skyfleet - his stock would have risen. Just to sell off shares, then lose when the stock goes up - well he would have lost out in furture capital, but he wouldn't have lost real money...

Anyone else see this, or can someone explain?

Le Samourai

It isn't "shortening," it's "shorting," which is the same as "short selling." It's too complicated to go into here, but this is a good explanation:

http://www.investopedia.com/university/shortselling/shortselling1.asp

Le Chiffre wasn't selling his shares of Skyfleet, he was shorting the stock, which means he was betting on the stock dropping in value. His broker even says something along the lines of "You're betting against the market. Everyone expects Skyfleet to go up."

thesecretagent

Thanks for clearing that up.

Le Samourai

thesecretagent wrote:

Thanks for clearing that up.

My pleasure! I was very much into investing a few years ago, but got out as the economy fell apart. I never shorted stocks though; it's just too risky for me.