A Corner in Piggly Wiggly (1959)

https://www.newyorker.com/magazine/1959/06/06/a-corner-in-piggly-wiggly

by tosh • 5 years ago

107 62 5 years ago

binarynate2• 5 years ago

There's a really good story on the stock corner of Piggly Wiggly in "Business Adventures", a book that Bill Gates said is his favorite business book.

https://www.gatesnotes.com/Books/Business-Adventures

frompdx• 5 years ago

When I saw this thread "Business Adventures" was the first thing I thought of. I bought a copy when it appeared on one of Bill Gate's summer reading lists. It's a great book. The story of the Piggly Wiggly stock corner is great, as is the story of the creation of the Xerox machine. I think I lent my copy to a co-worker who I'm fairly certain never read it. They also never gave it back. Oh well.

For anyone looking for a book in a similar vein I recommend "The Deltoid Pumpkin Seed" by John McPhee.

matthewowen• 5 years ago

This is that article: Business Adventures is a collection of Brook's New Yorker articles

binarynate2• 5 years ago

Oh yeah, you're right—thanks for pointing that out!

swalsh• 5 years ago

I loved every story in that book, it is also one of my top 10 favorite books.

tines• 5 years ago

The stock went up wildly, reaching a high of 124. At this point the Exchange suspended further trading & postponed the short sellers' delivery deadline. This resulted in eventual bankruptcy for Saunders & he was finally forced to step out of the Pigp]y [sic] Wiggly Company.

Bizarre. What grounds did they have for doing this?

Prima facie there are some similarities between this and the GME situation, I wonder if the outcomes will be the same.

trident5000• 5 years ago

Back-room deals are the backbone of America, from Politics to Business.

ndiscussion• 5 years ago

Yeah, I don't think it's too much of a mystery. It's almost certain that Wall Street "suggested" that someone at the exchange make this happen.

Whether it was a direct $$$ bribe or a call-in to the good old boys, we will probably never have proof.

majormajor2• 5 years ago

I wish there were more details about how this resulted in bankruptcy. Was it an eventual lack of ability to pay for the interest on the loan he used to borrow the stock, or did he fail to corner it, so other sellers ended up letting the shorters out of their position, and his shares plumetted?

ihunter2839• 5 years ago

Wikipedia sums it up pretty well

https://en.m.wikipedia.org/wiki/Clarence_Saunders_(grocer)#W...

tldr - the short sellers were given five days to find the necessary shares (compared to the standard 24 hours). That's a lot of time in 1923, and enough shares came in to get them out of the corner.

Clarencr Saunders (the Piggly man himself) was left with no way to repay the loan that allowed him to set up the squeeze and was forced to walk away from a truly revolutionary business he had built.

Read Business Adventures, as mentioned in other comments. Cannot recommend enough.

ElFitz• 5 years ago

The author expanded upon it in his book, Business Adventures.

Apparently, the only alternative was for short sellers’ to sell very large amounts of many other stocks, and the Exchange was afraid it would crash most of the other companies’ stocks.

The sentiment, from the book, appears to be that Saunders nearly caused a stock market crash all by himself, with his corner

throwaway22452• 5 years ago

Pigp]y [sic] Wiggly

This error is presumably due to failed OCR character recognition.

I can't access the original article (which is linked for subscribers) but it seems to be because the word is in italics? Or might the brand have had it's own stylistic ligature/logotype at the New Yorker?

imgabe• 5 years ago

Gamestop made me think of this. The moral of the story is that when you beat Wall Street at their own game, they will change the rules on you so they win anyway. Something to be cautious about in the current situation.

gruez5• 5 years ago

they will change the rules on you so they win anyway

Are you referring to how several popular brokerages prevented customers from opening new positions? That's due to them unable to fulfill deposit requirements on such volatile stocks, not because of some conspiracy by wall st to "change the rules on you so they win anyway".

see: https://www.bloomberg.com/opinion/articles/2021-01-29/reddit..., under heading "Why did Robinhood stop them?".

ummonk3• 5 years ago

I guarantee you the interests of institutions on the short side of the stock factored in to the decision to raise deposit requirements.

And the Interactive Brokers chairman is explicit about why he chose to block buys.

throwaway22452• 5 years ago

"oh, now that you're winning, there's this extra unwritten rule that I forgot to tell you about..."

majormajor2• 5 years ago

There's a general moral of the story here that isn't specific to Wall Street. If you think you've got a magic hack for some system, don't forget that the system might not be immutable, and that many people will consider the spirit of the rules not just the letter of them (even if this means changing the letter of them).

It's fairly similar to the risk of building a business by adding one feature to someone else's platform.

munificent• 5 years ago

Yeah. It is very rare that a clever rules-lawyer-style hack of a game will let you defeat people in power because they usually have enough power to hop up a level and beat you at the meta-game and you do not.

Like Solo telling Luke to let the Wookkie win.

smnrchrds2• 5 years ago

This holds true, even when the system assures you that it is immutable. I recall when a hacker noticed a vulnerability in some Ethereum smart contracts and used it to "steal" ETHs, the transactions were swiftly reversed and the whole concept of "the code is the contract" was thrown out of the window in the process.

https://www.wired.com/2016/06/50-million-hack-just-showed-da...

qwantim1• 5 years ago

Like the US winning the revolutionary war with guerrilla warfare tactics that native americans used against them when trying to defend themselves.

koolba• 5 years ago

The moral of the story is that when you beat Wall Street at their own game, they will change the rules on you so they win anyway.

They didn’t change the rules. The rules are clear that they’re allowed to change the rules anytime they want. That’s one of the rules.

mattnewton• 5 years ago

In this particular case I’m not sure actually; they changed contracts to allow a later date.

emmelaich• 5 years ago

https://en.wikipedia.org/wiki/Nomic

clankyclanker2• 5 years ago

https://en.wikipedia.org/wiki/Calvin_and_Hobbes#Calvinball

0823498723498722• 5 years ago

I don't believe it's possible to come up with a fixed set of rules that protects against market manipulation in both directions: the more one attempts to manipulation-proof in one direction, the easier it gets to manipulate in the opposite.

Spooky232• 5 years ago

Clearly the moral path is to let the market fail and implode. </s>

When the market is in danger, it’s foolish not to act to stabilize it. If robinhood collapsed into receivership, the outcome would be far worse for their customers.

ignoramous• 5 years ago

...far worse for their customers.

Doubt that, because given the overall politically charged sentiment around the squeeze, they would have declared Robinhood's demise a victory as well.

testfoobar• 5 years ago

One solution would be for management to raise capital by issuing boatloads of new shares. They could explicitly say the capital is to pay themselves bonuses to buy mansions and yachts.

mindcrime• 5 years ago

The moral of the story is that when you beat Wall Street at their own game, they will change the rules on you so they win anyway

https://youtu.be/MpmGXeAtWUw?t=90

coolgeek• 5 years ago

when you beat Wall Street at their own game, they will change the rules on you so they win anyway

It's not just Wall Street.

This explains the Republican demands for even more onerous voting restrictions. Even though those same Republicans have certified - under penalty of perjury - that there was effectively no fraud in the recent elections.

AnimalMuppet• 5 years ago

For an even earlier example, look at the Northern Pacific Railway: https://en.wikipedia.org/wiki/Northern_Pacific_Railway#Hill,...

0823498723498722• 5 years ago

In the next section, 'James J. Hill's philosophy of "community of interest," a loose affiliation or collusion among roads' reminds me of the https://en.wikipedia.org/wiki/Railroad_Commission_of_Texas .

taigeair2• 5 years ago

What's the chance they suspend further trading of GME stock?

joncrane• 5 years ago

In this case the retail brokerages have suspended or greatly curtailed opening new positions on GME, which has a similar result: stabilizing prices.

Just as the buying might be coordinated effort by readers of reddit, the suspension of buying new positions in GME is the coordinated effort by multiple large retail brokerages.

mcherm• 5 years ago

100% as it already happened.

The exchange didn't suspend trading, several brokers widely used by small investors did. And some of them didn't suspend all trading, just purchases (sales were still allowed).

There may or may not have been malicious intent, but the EFFECT is much stronger and less fair than a hault to trading would have been: it forces small investors (but not big ones) to push the stock in a particular direction.

ajsharp• 5 years ago

Josh Brown starts the podcast episode released yesterday telling this story. It's a fantastic re-telling, highly recommend.

As he says repeatedly in the episode, "Wall Street always changes the rules."

https://thereformedbroker.com/2021/01/29/pigs-get-slaughtere...

greenie_beans• 5 years ago

Another telling of this story + more stories: https://junto.investments/short-squeezes-and-market-corners/

adolph• 5 years ago

the bear raiders managed to convince the stock exchange to intervene and suspend trading in Piggly Wiggly and later grant an extension for paying up

_ea1k• 5 years ago

A lot of people here are focused on the finance, but I had no idea that Piggly Wiggly was the first self-service grocery store. Its also interesting that it had a single maze-like path through the store.

tedunangst• 5 years ago

Tangential: https://whitecollarfraud.com/crazy-eddie/crazy-eddie-fraud/

Marazan• 5 years ago

It is interesting to compare to the Porsche-Volkswagon squeeze of 2008.

In that one Porsche reaped the rewards of creating the squeeze

A Corner in Piggly Wiggly (1959)

Related Stories