Volkswagen: The Most Valuable Company in the World
Because of a freak event, shares of Volkswagen have spiked, giving it a market value of $370 billion, surpassing that of Exxon Mobil, at $343 billion.
On Sunday, Porsche unexpectedly disclosed that it had raised its stake in Volkswagen to 74.1 percent from 35 percent, through the use of derivatives.
At a time when much of the world is looking at the markets for signs of whether we can weather a financial crisis, an episode like this makes the volatility in stocks look like slapstick comedy. It is baffling how something so basic as a major shareholder doubling its stake could cause so much turmoil in a market. Yet somehow the acquisition came as a complete surprise. Where was the transparency here?
The price spike resulted from a squeeze. A number of hedge funds had shorted VW shares, betting that the company, like other automakers, would fall in the market as consumers cut back spending. In short sales, investors borrow shares and sell them, betting that the stock price will fall and that they can buy them back at a lower price and profit from the difference.
But the move by Porsche meant that there were very few shares of VW available. The German state of Lower Saxony, where Volkswagen is based, owns 20 percent. That means only about 5 percent of VW shares were on the market.
That scarcity drove up the stock price of Volkswagen. Its shares surged 150 percent on Monday and 93 percent today as hedge funds scrambled to buy shares and cover their positions.
“Each and any short-seller in the world is trying to close up their position, and there is no way they can do it except for trying to buy like mad,” Heino Ruland, an analyst with FrankfurtFinanz, told Reuters. “Someone is selling it at a rather interesting and rich price: It is about 10 times as much as it should trade.”
The VW squeeze play may well generate sympathy for short-sellers after months of vilification from politicians and executives who should know better. Shorts have been accused of manipulating stock prices through secretive means. Now they have been the victims of similar force.
“I have hedge fund managers literally in tears on the phone,” one London-based auto analyst told the Financial Times.
Soruce: Portfolio
New Make a Trade Page Coming…
We’ve heard from many active users that placing Trades takes too long. So, we will consolidate the Make a Trade pages down from three to one true, full page load.
This should significantly decrease the amount of time time it takes to place trades which can be crucial for Day traders, or Survivors who simply want to lock in a fast-moving price.
Here’s a sneak preview of the new trade page which should be live around Halloween:
Redesigned Make A Trade page with the following features:
- New Trade controls are laid out in a left-to-right row to emphasize the task flow; once something is selected, it should move to the next stage automatically. Clicking on a previous control takes you back.
- Each step in the trade taskflow is highlighted with an explanation, which can be folded up into a minimal version by clicking the triangle in the corner
- Trade logic is designed to prevent error messages. Each step presents only the possible options given the previous step, so it is impossible to select a trade chain that does not work; the only error message should be for a ‘Symbol Not Found’.
- For Stop and Limit orders, a pop-up dialog allows the user to set the price. If selected incorrectly, they can just click elsewhere or press Esc to close the pop-up and reset that drop-down to ‘Type’.
- If an order is a regular Market order, then the Duration control is greyed out.
- Once a quantity is entered in the QTY box, then it should jump to the Preview stage automatically, and the information displayed should update dynamically if the user increments or decrements the QTY value, for instance, if they want to achieve a specific trade price, etc.
- New column design with links at left, ad column at right incorporating the new tabbed content box
We’re in the Washington Post!
We were featured in an article about virtual stock market games in the Washington Post’s Sunday Edition written by Mike Musgrove called, “Meanwhile, All the Virtual Markets are Thriving.”
Write a comment at the site and let everyone know that WSS is great game to play!
Free Portfolio Resets Coming!
Soon, we are going to have free Portfolio resets available for anyone who wants them.
This is driven by the need to limit the Weekly prizes to Survivors who only have portfolios with a value greater than $50,000.
So, to make it fair for all Survivors, you will will be able to reset your Portfolio for free, if you wish.
Look for this offer at the top of the Dashboard.
