WILSON: Leverage made simple
Somewhere, deep within the depths of the Never-Ending Forest, an easily agitated demigod and an equally easily agitated wizard struggled to make their way to the Village of Garylarson, located at the far side of the forest. When they started on this journey, they weren’t so easily agitated. However, months of never-ending travel can make even the best of friends just a little bit grumpy.
Along the trail, they met up with a man sitting at a desk, staring intently into the depths of six interconnected computer monitors. The wizard, known in the world of mysticism as Rick, called out to the man seated behind the monitors. “We are traveling to the far side of the forest and cell coverage in this neck of the woods is weaker than a politician’s promise. Bring up Google Maps on that contraption and tell us the fastest way there.”
“The name is Robin Hood,” replied the man. “I would say it is nice to meet you, but you rudely failed to introduce yourselves.”
The demigod, known to his followers as LoDi, ignored the rudeness comment and continued to question the man. “You are Robin Hood? The guy that steals from the rich and…”
“Gives to the poor?” interrupted the man. “Nope. That was my Great-Great-Great-I honestly don’t know how many Greats-Grandfather. We’ve changed the focus of the family business. We are in online stock leverage, now. The future looks great.”
Since he was easily agitated and prone to theatrics, the wizard slammed the heel of his enchanted staff on the ground, causing flame and sparks to gush forth from its tip – always a big hit around the campfire. “What is this jibberish?” he gruffly challenged. “What is this stock leverage business.?”
“It is a great way to make money,” replied Robin Hood, with a sly grin. “It used to be called buying on margin, but that got a bad name after the stock market crash of 1929.”
“How does it work?” asked the overly greedy demigod, completely ignoring the market crash comment.
“It’s simple,” answered Mr. Hood. “You give me $100 in cash, and I give you $500 in stock.”
“That’s it?” questioned the wily wizard.
“Well…,” responded the still smiling man. “You still owe me the remaining $400, but don’t worry about that. You give me the $500 worth of stock, and I give you $1,000 in another stock. Now you have $1,000, but you’ve only given me the original $100 in cash.” Robin Hood paused for effect.
“I like this!” exclaimed LoDi.
“Then you give me the $1,000 in stocks and I give you $2,000 of another…and you still have only given me $100 in cash.”
“Sounds too good to be true,” scoffed the wizard. “What’s the catch?”
“Oh, there is no catch,” Robin replied slyly. “Of course, you would still owe me the remaining $400 from the initial transaction. No big deal.”
“Still,” mused the avaricious demigod, “$500 to get $2,000 ain’t too shabby.”
“Well…” the man cautiously continued, “There is the additional $500 on the second trade and another $1,000 on the third deal. Ssssoooo…you only had to actually spend $2,000 – plus trading fees, of course.”
“How is that a good deal?” gasped the wizard (who was now far beyond the ‘agitated’ stage).
The demigod was busy counting on his fingers, trying to understand the math. “Yeah! How is that a good deal?”
“Gentlemen,” Robin spoke in a reassuring tone, “Get that amount up to a billion dollars and the federal government will consider you too big to fail. They will bail you out and you can retire to a tropical island in the South Pacific, surrounded by beautiful women.”
“I like that!” exclaimed LoDi. “Where do I sign up?” He reached into his pocket and pulled out a wrinkled $100 bill.
Rick reached out and snatched the money away from his travelling companion.
“Then why are you sitting here, all alone, in the middle of the Never-Ending Forest, instead of surrounded by beautiful women on a tropical beach?”
“Ahhhh…,” sighed the man watching the monitors. “I didn’t make it to a billion dollars before the bottom dropped out. No worries, though. I’ve got it covered – I just bought a Powerball lottery ticket.”