Reddit user on r/wallstreetbets is "going to short the whole country of South Africa."

Desig

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Sep 15, 2016
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I mean ZA is screwed, but that doesn't seem like an extraordinary 'short', basically just playing the two currencies against each other

dangerous prospect at the best of times and forex trading isn't exactly new or novel
How do we make money out of this?
 

Vrotappel

Bulls fan
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Feb 22, 2005
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The mechanics of how the guy expects to make money is all wrong.

Why dont you give it a try and see what happens?
I was agreeing with the general sentiment on SA. Our long term trajectory is unfortunately down.
 

Shard

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GME is a drop in the ocean compared to the volumes ZAR is traded in, even this guy and is hoard won't be able to do anything substantial. Like he says its a long term play, so he not trying to move the market like GME, just giving an outlook.
Currency is not my thing I do more resources but I have friends that are currency arbitrage traders for global banks who have operations in SA that were having a laugh at this because he doesn't understand the trade. As mentioned in the post comments, interest is going cost him more than he makes.
 

rietrot

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The mechanics of how the guy expects to make money is all wrong.

Why dont you give it a try and see what happens?
Not really.

The currencies are expected to devalue again each other by the difference in inflation over the long term.

The Rand will never get much stronger against the dollar only weaker. (Except if the US accidentally prints too much and manages to create inflation themselves) which is unlikely.

The principle is correct.

If you can leverage that over the long term you might get his stated 20 something present.

The only problem I see would be the fees to have such a position open for a long term. The broker or whoever isn't stupid and they have calculated it to be profitable for them.
 

NarrowBandFtw

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How do we make money out of this?
if you're like me / most South Africans and your income is in ZAR ... you turn that ZAR into something that isn't ZAR quickly and regularly (property, gold, USD, bitcoin etc)

it's not so much about making money as it is about not losing money
 

NarrowBandFtw

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saturnz

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Ja. But how much is too much if everyone is doing it and it's all relative.

The rest of the world will still go to shít before the US.

the FED is printing much more than what the SARB is doing (in percentage terms)
 

Sayf777

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Ja. But how much is too much if everyone is doing it and it's all relative.

The rest of the world will still go to shít before the US.
I think the amount of how much they printed in 2020 was a good chunk overall. That's when you know if its too much?
 

rietrot

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I think the amount of how much they printed in 2020 was a good chunk overall. That's when you know if its too much?
It's hard too say. You know it's too much when the the average person needs a wheelbarrow full of cash to go and buy a bread.

Their stimulus checks that they are handling out is certainly concerning.

SA is better in this regard with the way we manage inflation by interests rates. We can run out of money and I think we already have, but we'll never have too much money,(wheelbarrows full).
 

diesel

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Maybe he just really hates how the government is racist.
How so? , i couldn't have summed up this country any better...

Went from one apartheid government that actually ran the country like a business to another apartheid government that runs the country like their own personal piggy bank.
 

Vorastra

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How so? , i couldn't have summed up this country any better...

Went from one apartheid government that actually ran the country like a business to another apartheid government that runs the country like their own personal piggy bank.
How so, what? Aren't we both saying the same thing?
 

BBSA

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Ja. But how much is too much if everyone is doing it and it's all relative.

The rest of the world will still go to shít before the US.
Correct, Japan and Europe have printed much more than the US, and even they don't have inflation.
 

JayM

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been happening for decades, only now it finally seems like it might bite them at long last

house prices shooting up 15% ... no inflation here :ROFL:

This is being driven by low interest rates on mortgages, not the Fed buying assets and treasury bonds. Lots of people moving to the suburbs with more flexible working arrangements, while inner city properties sit empty.
 

JayM

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Some of my international trading friends messaged me for some information on South Africa, was really confused till they linked me to the thread. https://www.reddit.com/r/wallstreetbets/comments/lkzviy
Thoughts?

IBKRs rate for borrowing ZAR is 6.3%. For him to win his bet, ZAR has to depreciate by more than that every year. In the near term that probably won't happen, but at some point there will be a huge devaluation when the government can no longer borrow at <9%. That will probably happen in 2024 or 2025 if we don't get a handle on the public sector wage bill, sooner if the exodus of taxpayers continues at the current rate.
 

Oldfut

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Didn't one George Soros do this quite successfully with the GNP? But that was pre-Reddit of course.
 
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