Blackstone Code

Short selling—a common financial practice.

Stockbrokers in Eminence often use a simple analogy like betting on small or big to explain long and short positions to clients who know nothing about finance. This straightforward explanation helps clients understand what they’re dealing with.

More specifically, let’s say a financial asset is priced at 100 units. At that point, A borrows one unit from B and sells it to someone else, pocketing 100.

Later, when the price drops to 50, A buys it back for 50 and returns it to B.

In this transaction, A profits 50 from the price drop. That’s how short selling works.

If the asset’s price goes up instead, A loses the same amount it rises by.

Of course, that’s just the basics. In reality, there are other factors that affect the final profit or loss. But overall, that’s the general idea of short selling.

Lynch wanted to lend money to Mr. Herbes. Herbes would use the money to buy another currency. When the Valier plummeted, he would buy it back at a dirt-cheap price and return it to Lynch. The difference left in his pocket would be his profit.

But would Lynch really be that generous?

That was the question. A big one. Mr. Herbes didn’t think Lynch was a good man—and for good reason. He had just said he was doing this to take revenge for a harmless joke from two years ago.

So could what Lynch just said be true?

Was he really doing this out of principle? Or was it another trap?

Mr. Herbes was feeling deeply conflicted. He could hardly focus. The looming bankruptcy made him feel like he was about to piss himself. Legs tightly closed, he asked, “How much?”

He was asking how much Valier Lynch could lend him. If Lynch had enough liquid Valier on hand, he might be able to recover some of his losses.

He quickly thought it over, like the last deal they did. He hadn’t found any issues with it, but now there was no time for deeper deliberation. He had to act fast.

If the Valier collapsed completely, he’d lose his last chance.

Lynch saw the desperation on Mr. Herbes’s face and smiled brightly. “Give me a moment…” He motioned for Herbes to sit down and went into the next room to make a call.

Though the door wasn’t fully shut, Herbes could faintly hear Lynch’s voice—it sounded like he was making inquiries.

That thought brought new doubts. Was this another trap Lynch had laid for him?

On the other end, Lynch was on the phone with Lime. “Do we or our clients still have any Valier in cash?”

“We’ve cleared out our own holdings, but the clients still have plenty…” Lime let out a short laugh. “At least fifteen to twenty billion’s worth is still with them.”

“I already followed your instructions and warned all clients about the risks with the Valier—told them not to hold it. But you know how it is—the Valier kept climbing and recently had a decent spike, so they insisted on jumping in with their managed accounts. So…”

Lime didn’t finish his sentence. He just laughed. Lynch knew exactly what he meant.

People, when faced with things they don’t understand, tend to fall into two categories.

The first are those with lower levels of education, status, wealth, or power—generally in the lower to middle tiers of society. They lack strong independent thinking and haven’t achieved much success. These people are easily swayed by those more professional than them—not because they’re gullible, but because they truly lack confidence in things they don’t understand. They have to rely on expert advice. That’s why Eminence’s brokers are often used as cautionary tales in legal shows and publications.

The second category consists of successful people—even if they’re not particularly well-educated.

They have status, wealth, or power—in other words, they’re winners. Winners trust their own judgment and are less likely to be persuaded by others. When their judgment clashes with Lime’s warnings, they don’t trust him. They trust their own instincts, their track record, and the intuition that brought them success.

As a result, Lime’s poorer clients—though still at least middle-class—stayed out of Valier. The wealthy ones, however, jumped in.

Roughly 20% of Lynch’s Valier was bought up by these people. The rest was swallowed by other players—because it was physical cash.

Not long ago, these same people were singing Lime’s praises for making them money from good news. But then the bad news came flooding in, and the Valier nosedived. Many of them took huge losses.

Lime wasn’t the least bit regretful. In fact, he felt a little gleeful. Watching those who ignored him suffer gave him a sense of satisfaction. He was in high spirits as he talked with Lynch.

“You did great—better than I expected…”