CASE Porsche / Volkswagen | How to lose or win everything in one day | TRADING TIPS
Discover this Porsche and Volkswagen investment story from the hands of Jordi Martí: professional trader and Head of Studies at La Factoría. It's a tragic trading case that ended the life of Adolf Merckle, one of the richest men in the world. Don't miss the end of the video.
I am going to tell you a story that I am passionate about: What happened to Volkswagen, Porsche and certain investment funds.
The Volkswagen case is a case that teaches us that in investments we should not get into where we do not know what is happening.
This is the Volkswagen graph from 2008. If ...
Read moreI am going to tell you a story that I am passionate about: What happened to Volkswagen, Porsche and certain investment funds.
The Volkswagen case is a case that teaches us that in investments we should not get into where we do not know what is happening.
This is the Volkswagen graph from 2008. If you look, this (show graph) is not normal. It is not normal for a Volkswagen-type stock to have these movements. Let's see what happened.
In 2006, Volkswagen was in a not very healthy situation and there was a high risk that it would be taken over by another rival non-German car company.
Porsche, a German company, began to buy Volkswagen shares to protect it from this possible takeover bid, as the price of Volkswagen shares increased each time, due to the law of supply - demand. If Porsche was buying the share price began to rise. There, some groups of investment funds, seeing that the price of Volkswagen had risen so much, thought that Porsche would not be interested in buying more shares and decided to go short, that is, they bet that the price of shares was going to fall.
What happened? Porsche announced on October 26 that, in a more or less hidden way, it had continued to buy Volkswagen shares and owned 75% of the shares. The rest, the remaining 25%, belonged to one of the langes of the German state, it was not for sale, therefore, investment funds had to buy back these shares to cover their short positions and this caused their bankruptcy investment funds.
Volkswagen went up from 210 to more than € 1,000. Porsche earned in that operation, in that hidden purchase of shares, the equivalent of 5 years of profit. Adolf Merckel, one of the mutual fund owners and went short, one of the richest men in Germany, went bankrupt and committed suicide. Obviously along the way thousands of small investors were trapped in this operation and lost their way.
In short, if you don't know what's going on, don't mess with it.
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