How accurate is “Billions” regarding the Trading world?

Cafe Society
1

First of all, I’m only on season 2, so please, NO SPOILERS!

I love this show. Two great characters in the hands of two outstanding actors; the supporting cast is solid and the writing is fantastic. In fact, the writing is so good that I don’t even have to understand the particulars of the business (which I often don’t) to know what’s going on in the show.

A couple of examples: S1, E4, “Short Squeeze.” I don’t know the mechanics involved in shorting a stock, other than the general idea that you’re betting on it going down instead of up. Axe shorted the trucking company stock, but Chuck Sr. bought in heavy and somehow caused the stock to rise, thus hurting Axe. Yes, that’s a very simplistic view of it, but it’s all I really needed to get the gist and follow the plot.

S2, E5, “Currency.” Axe needs his rivals to go in with him on a move that will hasten and capitalize on the devaluation of Nigerian currency. Again, it so well-written that I knew enough about what was happening to be invested and enjoy the episode, despite having absolutely know idea how global currency markets work in real life.

So, a two-part question:
How accurate is the portrayal of these situations? Is it dumbed-down for viewers like me to the point of being unbelievable to those who understand more? Is it pretty much how this stuff would go down in real life? Or at what point in between?
Part two: The general culture of the alpha-male, hard-partying, dick-measuring atmosphere of Axe Capital is almost a cliché. How close is the depiction of Axe Capital to a real high-end hedge fund office? I am so far removed from this world I have no idea.

Bonus question: Regarding the episode “Short Squeeze” mentioned above, Chuck pressures his father to take a loss on the stock because manipulating the market and then selling for profit would have been illegal. But Axe caused the stock to tank by pulling his snack cake company’s trucking contract, thereby profiting on the short. Isn’t that just as illegal? Why didn’t Chuck go after him for that?

2

I have no idea as to the accuracy of these storylines but I also love the show and highly recommend it. It’s currently in its fifth season, so you don’t have long to catch up.

Some characters and storylines are drawn from real life, like Chuck Rhodes was inspired in part by Elliot Spitzer and Axe was inspired by Steve Cohen.

3

The short squeeze is basically accurate. When you short sell a stock, you need to keep enough money in your margin account to settle (buy stocks to cover the short). As the share price goes up, people with short positions are forced to settle up. The buying pressure from people buying shares to cover the short causes the price to increase further and then more people are forced to cover. This cycle can cause huge spikes in share prices and bankrupt people.

It’s debatable how much pressure a large hedgefund would feel, especially if the shares didn’t come from a traditional broker relationship. They also probably have plenty of credit to work with.

The Tesla stock probably got hit with one a few weeks back, as a real life example.

4

By the time I joined an investment bank (ca. 2000), people were telling stories about how wild it was in the “old days”. That’s not a hedge fund, though (where you wouldn’t necessarily have the same oversight from corporate overlords).