The China Hustle Movie Script

And that's what this is all about, right?

That's $113 million that has just, poof, vanished Ah, because they never really did that kind of volume.

Dan realized he'd made money off of companies' lies, and it gnawed at him, because he knew he'd crossed into what a lot of people see as the dark side of finance-- short selling.

What is short selling?

Hmm, let me think about this.

I want to-- this is always a difficult one.

But short-- What is-- Well, the first short economically was probably some transaction between, you know, two Cro-Magnon person, promising some guy-- some other Cro-Magnon part of a sabre-tooth tiger.

This is Jim Chanos.

He's the dean of short sellers.

And he's brought down some of the biggest frauds in history.

If you want to think about short selling, all kinds of commercial transactions are short selling.

An airline that sells you an advance-purchase ticket, for example, is shorting you a seat.

Short selling is betting that a stock is gonna go down, as opposed to go up.

So shorting a stock, you'll often hear it referred to as "borrowing shares." This is where a lot of people get confused.

Here's a simple way to think of it.

Say I want to short sugar.

I think that sugar is overvalued and it's going to cost less in, say, six months than it does today.

I see a business opportunity.

I go to my neighbor and borrow one pound of sugar.

Then I turn right around and sell that sugar for the going rate of $1 a pound.

Yeah!

In about six months, when I have to give my neighbor a pound of sugar back, I go buy it on the open market, where the price has come down, and it only costs me 50 cents.

I give my neighbor a pound of sugar back, plus a little extra for interest, and pocket the 50-cent difference.

She's got her sugar back, and I've made money on my bet.

You want everybody else who's trading in that stock to believe what you're saying if you think that the company is a fraud or you think that something about the company is not true.