A Simple Visualization of a Story



The story was taken from this article
TIMELINE-Diary of a meltdown: how the Archegos Capital fire sale went down here.


a human drama played out in the financial world


Bill Hwang, an investor, noticed that the ViacomCBS stock was steadily rising for quite some time and wanted to benefit from that, but he didn’t want to buy the stock. A method to do that is called Total Return Swap. This is an agreement between a bank that holds the stock and an investor: when the price of a stock goes up, the bank pays the investor but when it goes down, the investor pays the bank. Sounds good, eh? Hwang loved it and made this agreement with several banks that owned the ViacomCBS stock, keeping it secret between the banks.

As the price of the stock kept rising, Hwang kept adding more and more stocks to the agreements. Greed got the best of him intill the day of reckoning. Market conditions suddenly changed and the banks where selling the stock like crazy. Hwang found himself overexposed and he didn’t have the money to pay the banks.

So sad.


sad
La Melancolie by Louis-Jean-François Lagrenee (1785)


This is how one would draw two line diagrams to illustrate the story.



The good times.
The stock price keeps rising and money flows to Hwang.
Hwang gets greedy and keeps adding more and more stocks to his account.

Bill Huang
investor
Archegos Capital

Several banks
holding ViacomCBS stock


<

The bad times.
The stock price suddenly drops and no money flows to the banks.
The banks have a fire sale and Hwang can’t pay the banks.

Bill Huang has
no money to pay the banks

The banks sell
the ViacomCBS stock
in a hurry.





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