Margin Trading or "Melons - a Horror Story "

It's a beautiful sunny day, I see a pile of melons for sale, and I think, like,

"If I buy here these melons and then bring them to the Eskimos living somewhere among the vast plains of tundra, they are going to pay me more for those melons, cuz they never saw any melons before and stuff. How much cash do I have? Oh, ok, it's five bucks, so I can buy one melon, and sell it for ten bucks in tundra, and have a five bucks profit. Which kinda sucks, because five bucks isn't that much and probably isn't even worth a hassle."

Then I like, think a bit more and come up with an idea.

"Like, I can borrow thousand bucks, buy a whole pile of melons, sell it to Eskimos for two thousand, and pocket a thousand dollar profit."

Which sounds cool to me. Sure, additionally I'd need to pay interest to the guy from whom I'd borrow those thousand bucks. Cuz, like, nobody normally is going to lend me money for free, unless they have a misfortune of being my friend, in which case when I start talking about money they just hang up or run away, depending on circumstances.

But anyway. I find a stranger, who doesn't know me, and borrow a thousand bucks from him, buy a pile of melons, and a plane ticket to the tundra. So I arrive there and see those Eskimo guys wrapped in piles of fur and bear skins, and I say like,

"Here are melons! Melons are a wonderful invention of civilization and stuff, and I'm ready to sell them to you for like, ten bucks each,"

The Eskimos are not sure what to make of it, so they wave me into their Igloo, and, while I sit there, eating whale intestines or whatever, they begin to argue how much they, in fact, should be paying for melons.

Ok, here's a twist. A guy who lent me thousand bucks was smart and had a condition attached to our deal. He basically said like,

"I can lend you money, I know you are going to buy melons and stuff, and also I want you to know that I'm going to take your melons, in case you won't be able to pay me back. In fact, I'll keep your melons in my garage while you'll be doing your bargaining with Eskimos, so if something goes wrong you can just kiss your melons Good Bye!"

So, in fact, while I'm in tundra, bargaining with Eskimos, my melons are in the garage of that guy, which already makes me kind of nervous.

But there's more to that. The melon prices are fluctuating, and while I'm eating whale intestines in the Igloo, it turned out, that now each melon costs not five bucks but one buck because of a sudden supply of cheap melons from some insidious African country.

So the guy, who lent me thousand bucks and keeps my melons in his garage, wakes up and realizes that those melons in his garage are not worth thousand bucks anymore. Now they are worth like, two hundred bucks.

So he phones me and says like,

"Look, we have a problem. Or rather, you have a problem. Those melons of yours aren't worth thousand bucks you owe me anymore. If I sell then now I'll get like, two hundred bucks, and I don't feel safe. Could you please send me like, eight hundred bucks in cash right now?"

And I'm like,

"Dude! I'm in the midst of negotiations with Eskimos, they are already like, ready to pay ten bucks per melon and stuff, so I get profit, you get profit, and everybody's happy. Just give me some time!"

And he's like,

"No, you know, I'm sorry, but I don't know anything about Eskimos and stuff. And, honestly, I don't care. So here's the deal. Either you send me the missing eight hundred bucks immediately, so you'd be owing me only two hundred bucks, which your rotting stinking melon collateral can cover. Or, I'm selling your fucking melons right now for whatever they are worth, namely, two hundred, and you'll still owe me eight hundred bucks, which you can cover by selling your kidney."

At the same moment, the Eskimos are coming to their final decision: whether to buy or not to buy those melons.

And finally, an hour later an Eskimo chieftain - a huge guy with a beard, clad in bearskins, gold necklaces and stuff - approaches me and says,

"Oh, Mighty White Man! We had a difficult but insightful conversation, and we are, in fact, ready to buy your melons for ten bucks each,"

And this is kinda a moment of triumph and elation for me. Like, I made it! Despite all the dangers, and difficulties, and uncertainties I made it! I'll get two grand, pay one grand and the interest to that cunt of a person for his damaged nervous cells, and I'll still have about one grand of profit, on which I'll be able to buy, I don't know, whatever. The point is, it's miraculous, and life is showing its bright side, the sky is blue, and even the tundra doesn't look so daunting, gray, and depressing anymore.

So, I phone the guy and say, "Look! There is marvelous news I gonna tell you! I got a deal with the Eskimos, and they are ready to take the melons, and I'm about to make a cool profit, and you are about to get your loan back with interest! Life is beautiful, and unicorns are singing! Ok, can you send me those melons asap, so I can deliver them to Eskimos, collect money, and make us both happy?"

And the guy pauses a bit and says like, "You know what... there are no melons. In fact, I sold them an hour ago, as it's the rule. Namely, since those melons became cheaper and couldn't serve as a collateral for your debt anymore... well, what I did, I sold them for what I could get for them. I managed to get like, two hundred bucks, so you owe me eight hundred bucks, and there are no melons. I'd like to remind you that you can still solve the problem by selling your kidney"

And in the meantime the Eskimo chieftain looks at me questioningly and asks "So what? We have a deal, when are you going to deliver those melons, so we can finalize the deal, and we will give you our cash and stuff?"

And I'm like "Fuck..."

Then two days later that I spend, sitting in the lotus position in the middle of tundra, stunned and contemplating suicide, I hear the news that melon price has rebounded from one buck to seven bucks per melon. The slump in melon prices was just a matter of one day speculation. There was an offer of a huge batch of cheap melons from some dodgy African company, but those melons were never delivered. So everybody learned that melons were not going to cost a buck, it was just a fantasy, a rumour, a cunning move made by somebody to temporarily undermine the prices.

And at this point, I become paranoid, like, I wonder if somebody did it to me on purpose, knowing that I was in that risky leveraged position with thousand dollar debt, collateralized by melons. It could happen. And after a day of turmoil, everything returned to its normal state, but I'm permanently and irreversibly fucked. So I consider the options: come back, sell my kidney, and pay off the debt. Or maybe I can stay in the tundra forever, living with those naive but wonderful people, chasing bears, riding reindeers and stuff. It doesn't seem like a bad idea.

So, Ok, the point is, margin trading is kinda really risky; like, in a matter of minutes, you can find yourself in a pile shit, deep enough to bury Egyptian Pyramids and Quasars.