Personal Finance PowerPoint Presentation, Short Selling. Prepare to get financially fit by practicing personal finance. Most of this information comes from Investopedia, Short Selling, which you can find online. Take a look at the references, resources, continue your research from there. This by Adam Hayes, updated March 1st, 2022. In prior presentations, we've been taking a look at investment goals, strategies, tools, keeping in mind the two major categories of investments, that being the fixed income, typically the bonds, the equities, typically the common stock. Also keep in mind the tools that you are using, which could include things like mutual funds, ETFs, helping you to pool resources together, possibly leading you to make different investment decisions to diversify than if you're buying individual stocks, in which case, you might be drilling down onto the financial statements for those particular companies doing ratio analysis and trend analysis on them. Keeping that in mind, what is short selling? Short selling is an investment or trading strategy that speculates on the decline in a stock or other securities price. So typically when we're investing, the strategy is to buy low, sell high. So usually we're gonna be purchasing when we think that there's gonna be an increase in the price and selling when the price is high would be the general idea. Here we're basically betting that there's gonna be a decline in the price. So the idea would be, if I think that there's gonna be a decline in the price of stock, is there a trading strategy that I could use to benefit on that prediction? If I'm doing it for speculative purposes, the short sell might be the tool there. It is an advanced strategy that should only be undertaken by experienced traders and investors. So long-term investors trading for something or investing for something like retirement, probably will not be looking at this strategy. They might be using tools such as mutual funds, ETFs under umbrellas like IRAs and tax benefit type of funding like IRAs and 401K plans and probably aren't looking at those short sales, which are typically more experienced traders looking at that might be looking at that for speculative purposes, possibly looking to make a profit basically on the short term, as opposed to someone saving for retirement, which is putting money away and generally playing the long-term game and looking to diversify on it. So traders may use short selling as a speculation and investors or portfolio managers may use it as a hedge against downside risk of a long position in the same security or a related one. So pure speculation would be, I think this is gonna happen in the future with this particular stock and I would like to put in a strategy to profit from my guess in the short term. A more of a hedge would be a more kind of of a sophisticated plan within your portfolio that you're using it in a specific way to lower the risk of the portfolio. Speculation carries the possibility of substantial risk and is an advanced trading method. Hedging is a more common transaction involving placing an offsetting position to reduce risk exposure. In short selling, a position is opened by borrowing shares of a stock or other asset that the investor believes will decrease in value. So we're gonna be borrowing the shares, we think they're gonna be going down in value in the future. The investor then sells these borrowed shares to buyers willing to pay the market price. Before the borrowed shares must be returned, the trader is betting that the price will continue to decline. So by the time they actually have to be giving the borrowed shares, they're expecting the price to go down in that timeframe so they can purchase them at a lower cost.  The risk of loss in a short sale is theoretically unlimited since the price of any asset can climb to infinity. So in other words, the thing that you can get caught up easily in a short sale and can be very painful is that you promise to give these shares that you're gonna be purchasing in the future expecting the price to go down, but the price skyrockets, right? And now you've got it, now you've got to complete the promise, but you'll have to buy the shares at the higher price, which would not be good. So understand in short selling, with short selling, a seller opens a short position by borrowing shares usually from a broker dealer hoping to buy them back for a profit if the price declines. Shares must be borrowed because you cannot sell shares that do not exist. So to close a short position, a trader buys the shares back on the market hopefully at a price less than what they borrowed the assets and returns them to the lender or broker. Traders must account for any interest charged by the broker or commissions charged on trades. So you're borrowing in essence here, so you could have some other added costs related to the borrowing of the funds that being interest, the rent on the purchasing power. So to open a short position, a trader must have a margin account and will usually have to pay interest on the value of the borrowed shares while the position is open. Also financial industry regulatory authority incorporated the FINRA, which enforces rules and regulations governing registered brokers and broker dealers firms in the United States, the New York Stock Exchange, NYSE and the Federal Reserve have set minimum value for amount that the margin account must maintain known as maintenance margin. So they're trying to regulate, how much you're gonna have to have in that account. So if an investor's account value falls below the maintenance margin, more funds are required or the position might be sold by the broker. The process of locating shares that can be borrowed and returning them at the end of the trade is handled behind the scenes by the broker. Opening and closing the trade can be made through the regular trading platform with most brokers. However, each broker will have qualifications. The trading account must meet before they allow margin trading. Why sell short? Why do it? The most common reason for engaging in short selling are speculation and hedging. So speculation, you're just guessing in the future.  You think you can predict the future and you're trying to play the speculation game on it to make some money on it. Hedging would be a situation where you're trying to strategically use this method to adjust for undue risk in your portfolio. So a speculator is making a pure price bet that it will decline in the future. If they are wrong, they will have to buy the shares back higher at a loss because of the additional risk in short selling due to the use of margin. It is usually conducted over a smaller time horizon and is thus more likely to be an activity conducted for speculation. So when you're doing speculation, you're often looking at the shorter term. Remember when you're thinking about your investing strategies, you gotta think of my looking at long-terms horizons, medium-terms or short-terms because the activity of the market will of course be different in concept between those different time horizons you're gonna be focused in on. People may also sell short in order to hedge a long position. For instance, if you own a call options which are long positions, you may want to sell short against that position to lock in profits. Or if you want to limit downside losses without actually exiting a long stock position and can short in a stock that is closely related or highly correlated with it. Example of short selling for a profit. Imagine a trader who believes that XYZ stock currently trading at $50 will decline in price in the next three quarters. So we know it's not inside information but I have some special information.  I know some Congress people passing some laws. No, we just know we've got some speculation. Crystal Ball says so they borrow 100 shares and sell them to another investor. So they borrow the shares, they sell the shares to another investor. The trader is now short 100 shares since they sold something that they did not own but had borrowed. So now we've sold something that we don't actually have. So the short sale was only made possible by borrowing the shares which may not always be available if the stock is already heavily shorted by other traders. A week later the company whose shares were shorted reports a dismal financial results for the quarter. I told you my resources are always correct but actually it was just my crystal ball. No one told me anything but. And stock falls $40. The trader decides to close the short position and buys 100 shares for $40 on the open market to replace the borrowed shares. The trader's profit on the short sale excluding commissions and interest on the margin account is $1,000, $50 minus $40 equals $10 times the 100 shares or $1,000. Example of short selling for a loss using the scenario above. Let's now suppose the trader did not close out the short position at 40 but decided to leave it open to capitalize on further price decline. So now they're getting greedy. They're saying, I knew it, it was gonna go down but I'm holding out here. However, a competitor swoops in to acquire the company with a takeover of a $65 per share and the stock soars. So if the trader decides to close the short position at 65, so now it went up in price, that's not good. The loss on the short sale would be $1,500. That's the $50 minus the 65, negative $15 times 100 shares. That's how we get the 1,500. Here, the trader have to buy back the shares at a significantly higher price to cover the position. Example of short selling as a hedge then. Apart from speculation, short selling has another useful person, hedging after perceived as the lower risk and more respectable avatar of shorting. So hedging would be more of a general business use that would make sense as opposed to speculation which is kind of gambling or kind of projecting into the future. So the primary objective of hedging is protection as opposed to the pure profit motivation of speculation. Hedging is an undertaking to protect gains or mitigate losses in a portfolio but since it comes at a significant cost, the vast majority of retail investors do not consider it during normal times. The cost of hedging are two-fold. There's the actual cost of putting on the hedge such as the expenses associated with short sales or the premiums paid for protective options contracts. Also, there's the opportunity cost of capping the portfolios upside if markets continue to move higher. So in other words, you know, there's risk and rewards being in play here. So if the markets continue to go up, you're gonna have some more upside if you don't hedge but the hedging will basically save you in the event that the market shifts in the way it's basically going. So you've got the cost of the opportunity cost because you're gonna have less upside but you're gonna hopefully mitigate the downside and you've got the cost of implementing the tool that you're gonna use for the hedging. As a simple example, if 50% of a portfolio that has a close correlation with the S&P 500 is hedged and the index moves 15% over the next 12 months, the portfolio would only record approximately half of that gain or 7.5%. Pros and cons of short selling, the selling short can be costly if the seller guesses wrong about the price movement. So obviously if you're wrong on the short sale, that's not good. A trader who has bought stock can only lose 100% of their outlay if the stock moves to zero. However, a trader who has shorted stock can lose much more than 100% of their original investment and that's because if you buy the stock, you know how much you put in. You're just gonna lose how much you put in if the stock goes down to zero. If you short, you don't know what the price of the stock could be. If so, the stock just went up by crazy. If there was a hostile takeover that was good or something for the stock and it went up, then that could be costly. And you don't know how costly it is whereas if you just bought the stock, you know how much that you have to lose. The risk comes because there is no ceiling for the stock's price. It can raise to infinity and beyond to coin a phrase from another comic character Buzz Lightyear. Also, while the stocks were held, the trader had to fund the margin account. So even if all goes well, traders have to figure in the cost of the margin interest when calculating their profits. So the pros, a possibility of high returns, little initial capital required. So that's another big pro that some people might look as advantageous. You don't really need the cat. You know, you could borrow the funds to initiate the short leverage investments possible. So hedge against other holdings. Cons, potentially unlimited losses, margin account necessary. So you need a more complex kind of setup. Margin interest incurred. So you got interest that you got to deal with. Short squeezes. So when it comes time to close the position, a short seller might have trouble finding enough shares to buy if a lot of other traders are also shorting the stock or if the stock is thinly traded. Conversely, sellers can get caught in a short squeeze loop if the market or a particular stock starts to skyrocket. So on the other hand, strategies that offer high risk also offer high yield reward. Short selling is no exception. If the seller predicts the price moves correctly, they can make a tidy return on investment, ROI, primarily if they use margin to initiate the trade. Because they're basically using a leverage kind of component that we talked about in prior presentation when you kind of buy on margin. So using margin provides leverage, which means the trader did not need to put up much of their capital as initial investment. If done carefully, short selling can be an inexpensive way to hedge, providing counterbalance to other portfolio holdings. Beginning investors should generally avoid short selling until they get more trading experience under their belts. That being said, short selling through ETFs is a somewhat safer strategy due to the lower risk of a short squeeze. So you could ETFs are kind of similar to mutual funds, but they trade more similarly to stocks. So you could use similar strategies with individual stocks on the ETFs, which are kind of similar to mutual funds and that they are a grouping of portfolio, for example. And they're usually based on indexes that we've talked about in prior presentations. Additional considerations with short selling. Besides the previously mentioned risk of losing money on a trade from a stock's price rising, short selling has additional risks that investors should consider. So we got the shorting using borrowed money. Shorting is known as margin trading. When short selling, you open a margin account which allows you to borrow money from the brokerage firm using your investment as collateral. Just as when you go long on margin, it's easy for losses to get out of hand because you must meet the minimum maintenance requirement of 25%. If your account slips below this, you'll be subject to margin call and forced to put in more cash or liquidate your position. Wrong timing. Even though a company is overvalued, it could conceivably take a while for its stock price to decline. In the meantime, you are vulnerable to interest margin calls and being called away. So in other words, even if you've predicted, you say, hey, I know that the stock is overvalued. I think it's gonna have to go down in price in the future. You don't know exactly when the market might react, even if you made the right call that it was overvalued. So the short squeeze, if a stock is actively shorted with a high short float and days to cover ratio, it is also at risk of experiencing a short squeeze. A short squeeze happens when a stock begins to rise, the short sellers cover their trades by buying their short positions back. This buying can turn into a feedback loop. So now you have a situation that people have shorted the stock, right? But the stock now is going up and people are trying to get out while the stock is going up. And that actually creates this feedback loop of the stock going up. And you can get stuck in that feedback loop. So demand for shares attracts more buyers which pushes the stock higher, causing even more short sellers to buy back or cover their position. Regulatory risks. Regulators may sometimes impose bans on short sales in a specific sector or even in the broad market to avoid panic and unward to selling pressure. Such actions can cause a sudden spike in stock prices, forcing the short seller to cover short positions at huge losses, going against the trend. History has shown that in general, stocks have an upward drift. So over the long run, most stocks appreciate in price. So we would hope that the companies are gonna basically generally go up. There's gonna be, you know, as we've seen a bunch of times, but if we zoom in, there's gonna be peaks and troughs, but we would hope that most stocks are gonna have a longer term trend that's basically an upward types of trend. That's why the short sales are typically something that happens on the shorter time frames if you're doing it for speculative purposes, which means you're looking for these short term peaks and troughs rather than what hopefully will happen most of the time in the long run, which is a long term growth trend. So for that matter, even if a company barely improves over the years, inflation or the rate of price increase in the economy should drive its stock price up somewhat. So what this means is that shorting is betting against the overall direction of the market. So if the stock is generally gonna be going up, you're actually betting that it's gonna go down in the short run. So you're actually kind of betting against the upward trend because you're betting on the short term moves. So cost of short selling, unlike buying and holding stocks or investments, short selling involves significant costs in addition to the usual trading commissions that have to be paid to brokers. Some of the costs include margin interest. Margin interest can be a significant expense when trading stocks on margin, so you're taking out a loan basically for the stocks, you gotta pay the interest on it. So since short sales can only be made via margin accounts, the interest payable on short trades can add up over time, especially if short positions are kept open over an extended period. You got the stock borrowing costs, shares that are difficult to borrow because of high short interest, a limited float or any other reasons have hard to borrow fees that can be quite substantial. The fee is based on the annualized rate that can range from a small fraction to a percent to more than 100% of the value of the short trade and is prorated for the number of days that the short trade is open. So as the hard to borrow rate can fluctuate substantially from day to day and even on an intraday basis, the exact dollar amount of the fee may be known at in advance. The fee is usually assessed by the broker dealer to the client account either at month end or upon closing of the short trade and if it is quite large can make a big dent in the profitability of a short trade or ex-surbate losses on it. So we got dividends and other payments. The short seller is responsible for making dividend payments on the shorted stock to the entity from whom the stock has been borrowed. So the dividends would typically be the money that's coming from the company from retained earnings to the owner of the shares. So the short seller is also on the hook for making payment on account of other events associated with the short stock, such as share splits. So if there's a split involved that'll complicate the situation, spin offs. So that'll complicate the situation and bonus share issues, all of which are unpredictable events. So if you're in the middle of a short sale and then they have a stock split, but now all of a sudden you've got to twice as many stocks that you're kind of on the hook for and so on, although you would expect that half the price but obviously that'll complicate things. So short selling metrics, two metrics used to trade short selling activity on a stock or we got number one, short interest ratio SIR also known as the short float measures the ratio of shares that are currently shorted compared to the number of shares available or floating in the market. A very high SIR is associated with stock that are falling or stocks that appear to be overvalued. So you can look at that as a kind of an indication. Number two, the short interest to volume ratio also known as the days to cover ratio, the total shares held short, divided by the average daily trading volume of the stock. A high value for the days to cover ratio is also a bearish indication for a stock. Both short selling metrics help investors understand whether the overall sentiment is bullish or bearish for a stock. For example, after oil prices declined in 2014 general electric GE energy divisions began to drag on the performance of the entire company. The short interest ratio jumped from less than 1% to more than 3.5% in the late 2015 as short sellers began anticipating a decline in the stock. By the middle of 2016 GE's share price had topped out at $33 per share and began to decline. By February 2019, GE had fallen to $10 per share which would have resulted in a profit of $23 per share to any short seller lucky enough to short the stock near the top in July 2016. Ideal conditions for short selling. Timing is crucial when it comes to short selling. Stocks typically decline much faster when they advance and a sizable gain, a sizable gain in a stock may be wiped out in a matter of days or weeks on an earnings miss or other bearish development. So clearly you got some key days that could, when their earnings come out and so on and so forth that would be the opportunity for that, the stocks to fall during a short time frame for example, the short seller thus has a time, has to time the short trade to near perfection. So again, this is why this is a more advanced technique if you're doing it purely for speculation because you're looking up fairly small time frames in that case. So entering the trade too late may result in a huge opportunity cost in terms of lost profits since a major part of the stock's decline may already have occurred. So on the other hand, entering the trade too early may make it difficult to hold onto the short position in light of the costs involved in potential losses which would skyrocket if the stock increases rapidly. There are times when the odds of successful shorting improve such as the following. During a bear market. So the dominant trend for stock market or sector is down during a bear market. So a bear market of course, meaning the market in general is going down. So clearly you would be more likely to bet in the right direction if you're betting on something going down, if you're in a situation or environment where everything is going down. So traders who believe that quote, the trend is your friend, end quote have a better chance of making profitable short sale trades during an entrenched bear market than they would during a strong bull phase. Short sellers reveal an environments where the market decline is swift, broad and deep like the global bear market of 2008, 2009 because they stand to make winful profits during such times. When stock or market fundamentals are deteriorating. So a stock's fundamentals can deteriorate for any number of reasons, slowing revenue or profit growth, increasing challenges to the business, rising input costs that are putting pressure on margins and so on. So for the broad market, worsening fundamentals could mean a series of weaker data that indicate a possible economic slowdown, adverse geopolitical developments like the threat of war, a bearish technical signals like reaching new highs and decreasing volume, deteriorating market breadth. So we've got the experienced short sellers may prefer to wait until the bearish trend is confirmed before putting on short trades rather than doing so in anticipation of a downward move. So they might actually look for the move to start down because then you would think that, you know, you're more likely to make a good guess because it's already on the down shift. This is because of the risk that a stock or market may trend higher for weeks or months in the face of a deteriorating fundamentals. So in other words, you're seeing the fundamentals go down but the market psychology is such that that might not actually draw down the stock price until some future point. So you might be fairly convinced the stock price is gonna go down some point but you don't know exactly when that's gonna happen. Once this trend down starts to happen, it often, you know, the sentiment in the market will build on itself and we think that it might keep going down to what you think the fundamentals should reflect. So it is typical of the case in the final stage of the bull market. Okay, so we got the technical indicators confirmed the bearish trend. So short sales may also have a higher profitability of success when the bearish trend is confirmed by multiple technical indicators. These indicators could include a breakdown below a key long-term support level or a bearish moving average crossover like the death cross. So an example of a bearish moving average crossover occurs when a stock's 50-day moving average falls below its 200-day moving average. A moving average is merely the average of a stock's price over a set period of time. If the current price breaks the average, either down or up, it can signal a new trend in price. Valuations reach elevated levels amid rampant optimism. Occasionally, valuations for certain sectors or market as a whole may reach highly elevated levels amid rampant optimism for long-term prospects of such sectors or the broad economy. So now you've got people's sentiments looking like they're outpacing what you would think the fundamentals would be. Market professionals call this phase of the investment cycle price for perfection since investors will inevitably be disappointed at some point when their lofty expectations are not met. So you would think that at some point they're gonna see that they're not looking at things properly. Rather than rushing in on the short side, experienced short sellers may wait until the market or sector rolls over and commences its downward phase for the same reason, because even if you think that's the case, you don't really know when the realization will happen although you think it will happen. So John Maynard Keynes was an influential British economist whereby his economic theories were still in use today. However, Keynes was quoted saying, quote, the market can stay irrational longer than you can stay solvent, end quote. So in other words, if you're playing the long game, the Keynes would basically say and the long we're on, we're all dead, right? So he would be saying you can't really depend on a long game too much. You could argue that back and forth, but the question is where, how sticky are the market prices gonna be even if you're making good predictions based on the fundamentals and how do you play those given market sentiments on different time frames like short term, medium term and long term perspectives? So which is particularly apt for the short selling. So the optimal time for short selling is when there is a confluence of the above factors. Short selling reputation, sometimes short selling is criticized and short sellers are viewed as ruthless operators out to destroy companies. So in other words, a lot of times, if you say I do a lot of short selling, people would say well that's not a very dignified profession or something like that because you're betting against the market and so on and this and that. However, the reality is that short selling provides liquidity meaning enough sellers and buyers to markets and can help prevent bad stocks from rising on hype and over optimism. So clearly short selling plays a role that's critical so there could be problems with the functionality of it but obviously if you truly think that a stock is overvalued and you could short sell it that's gonna help the market forces to drive the market price you would think to what would be a more optimal position. So evidence of this benefit can be seen in asset bubbles that disrupt the market assets that lead to bubbles such as the mortgage backed security market before the 2008 financial crisis are frequently difficult or nearly impossible to short. Short selling activity is a legitimate source of information about market sentiment and demand for a stock. So again, if someone really has the information you might say well they're just being greedy because they're short selling and obviously there's insider trading and this kind of stuff involved but if they're really looking at the fundamentals and they're able to say hey the stock is overvalued and they're shorting it and they're playing that role then that's valuable if they're correct about it because that's gonna drive the stock price again using the market forces to make us realize the reality of the situation based on the market. So without this information, investors may be caught off guard by negative fundamental trends or surprising news. Unfortunately, short selling gets a bad name due to the practices employed by unethical speculators. These unscrupulous types have used short selling strategies and derivatives to artificially deflate prices and conduct bear raids on vulnerable stocks. So if you're using the short selling because you have the market power to actually drive the market down not based on fundamentals but based on your activity you're driving the market down then of course that would be kind of an abusive strategy that isn't getting more information to the market but rather is abusing the power that you have to influence within the market and that would be a negative kind of use of it. So most forms of market manipulation like this are illegal in the US but it still happens periodically. Real world example of short selling, unexpected news events can initiate short squeeze which may force short seller to buy at any price to cover their margin requirements. For example, in October 8th, Volkswagen briefly became the most valuable publicly traded company in the world during an epic short squeeze. In 2008 investors knew that Porsche was trying to build a position in Volkswagen and gain majority control. Short sellers expected that once Porsche had achieved control over the company the stock would likely fall in value so they heavily shorted the stock. However, in a surprise announcement Porsche revealed that they had secretly acquired more than 70% of the company using derivatives which triggered a massive feedback loop of short sellers buying shares to close their position. Short sellers were at a disadvantage because 20% of Volkswagen was owned by a government entity that wasn't interested in selling and Porsche was controlled another 70% so there was very few shares available on the market float to buy back. So now you got this limitation. Essentially, both the short interest and days to cover ratio had exploded higher overnight which caused the stock to jump from a low of 200s to over 1000 euro. A characteristic of a short squeeze is that they tend to fade quickly and within several months Volkswagen stock had declined back into its normal range. Why is it called selling short? A short position is one that bets against the market profiting when prices decline. To sell short is to take such a bet. This is opposite to a long position which involves buying an asset in hopes the price will rise. Why do short sellers have to borrow shares? You cannot sell something that doesn't exist since a company has a limited number of shares outstanding. A short seller must first locate some of those shares in order to sell them. The short seller therefore borrows those shares from an existing long and pays interest to the lender. This process is often facilitated behind the scenes by one's broker. If there are not many shares available shorting, i.e. hard to borrow, then the interest costs to sell short will be higher. Is short selling bad? Well, some people think it is unethical to bet against the market. Most economists and financial professionals agree that short sellers provide liquidity and price discovery to a market making it more efficient. Can I sell short in my brokerage account? Many brokers allow short selling in individual accounts but you must first apply for a margin account. What is a short squeeze? Because short sales are sold on margin, relatively small losses can lead to ever larger margin calls. If a margin call cannot be met, the short must buy back their shares at ever higher prices. This works to bid the price of the stock even higher.


and now stay tuned for the program that is rated tops in popularity for a longer period of time than any other west coast program in radio history the signal oil program the whistler signal the famous go farther gasoline invites you to sit back and enjoy another strange story by the whistler I am the whistler and I know many things for I walk by night I know many strange tales hidden in the hearts of men and women who have stepped into the shadows yes I know the nameless terrors of which they dare not speak and now for the signal oil company the whistler strange story end of the road it was night on fountain avenue in Hollywood but the darkness was pierced with shafts of light from police spotlights and there was a crowd pushing forward babbling excitedly turning the usually quiet residential section into a bedlam a siren wails another police car swung around the corner and ground to a stop and a uniformed occupants leaked out ready for action and it was about that time the Doris Chandler pushed her way to the front of the crowd pardon me please close enough to hear the conversation of the officers intent on the small white bungalow now bathed in the searchlights Jaeger was then wasn't it Doris you heard the name of the criminal they trapped inside as an officer explained to one who had just arrived it's Jaeger Mac Steve Jaeger cop killer right we got a telephone tip on him about half an hour ago you sure he's inside the boys in the first squad car got a look at him through the window they put in the alarm when he started throwing slugs armed this won't be easy I will wait him out and try tear gas you got the loudspeaker ready Dave I'll set go ahead attention Jaeger Steve Jaeger this is a warning come out on the front porch throw your gun away you have a chance the hearts in the entire block is surrounded Jaeger this is a final warning come out and throw your gun away we'll give you one minute one minute Jaeger to decide it's all you need to hear isn't it Doris and you ease back through the crowd hurry from the scene to your own apartment only a few blocks away it's all over for Steve Jaeger you're certain and the money Steve's money hidden in your apartment will belong to you now yes a fitting reward for your cleverness in phoning in that anonymous tip to the police safely inside your apartment you lower the shades and smile to yourself as you think of what's happening to Steve just a few short blocks away and then yes it's me Charlie oh Charlie glad you called just want to make sure my little sister's okay why wouldn't I be haven't you heard on the radio Steve Jaeger Steve what about him oh it's all right nothing to worry about only I didn't even know the guy was in town they got him trapped in a house someplace the cops Steve Jaeger trapped of course not you know how I feel about him Charlie look I don't like cop killers are payroll fees hello Charlie if you called me up to easy said no no you can go back to sleep wait a minute what what is it your hand trembles as you hang up the phone Doris your brother Charlie's warning seems unreal doesn't it like something from a terrible nightmare Steve Jaeger the man you double cross told the police about his escape and you know that he'll head straight to you yes Doris you lied when you told your brother you hadn't seen or heard from Steve Jaeger didn't you because every bit of the more than $50,000 he got from that payroll job he pulled in Seattle is in your apartment at this very moment because Steve thought it would be safe with you you look out past the drawn window shades the street outside appears quiet and empty then your heart seems to stop dead still the kitchen someone there and you recall that you left the back door on lock Chandler are you home dear oh Mrs. Fabian yes dear I just had to come over see if you'd heard goodness has been some shooting by the police right in our neighborhood shooting they they killed someone oh I don't think so dear it's a criminal they said on the radio he gave the police the slip a killer he shot an officer in Seattle a few months ago I I say it's on the radio don't you want to turn it on dear and no no no I I've got to go out my brother called he isn't well I've got to go over there oh you're not going out dear and no I'm not afraid I'll take the car I just won't sleep until I see the child is all right of course but do be careful child goodness a killer walking the streets you get on home Mrs. Fabian keep the house locked don't worry I will good night dear good night you see your neighbor out the back door lock it after her and then quickly hurry to the bedroom and pack a small traveling case and the last thing before closing the bag you take the money Steve left put it in the bag with your clothing a moment later you slip quietly out the back door hurry to the garage lift the door baby Steve I've been waiting for you didn't think you'd want to go any place without me one evening recently while doubling in the role of babysitter I was telling our neighbor's little son about Santa Claus how Santa comes all the way down from the North Pole non-stop gosh Marvin the little fella exclaimed Santa Claus must use that famous go farther gasoline like daddy does well reluctantly I had to admit that Santa uses a sleigh powered by reindeer but if Santa did use an automobile you can bet he'd be interested in signals good mileage and since Santa knows quality he'd certainly appreciate signals quick cold weather starting signals lively pickup signals smoothest skating power that's why you can put Marvin Miller on record is saying if Santa ever trades prancer and dancer and under and Blitzen for a car I predict mr. Claus will power it with signals the famous go farther gasoline it was a terrible moment wasn't it done when you opened the garage door and saw Steve Yeager the killer who'd stolen $50,000 in Seattle the criminal who turned the money he took over to you for safe keeping the man you double-crossed by tipping the police off to his presence in the area and now he stands there smiling coldly and you're certain that it's all over that he's going to kill you and you're certain too that his guest it was you who called the police your mind struggles for an excuse doesn't it Doris something to say to Steve by way of explanation but nothing comes from your lips and then you realize that he's speaking and nodding toward the car I said in the car we're getting out of here Steve Steve you don't think that I would get in the car you got the keys right here go ahead start it by the dame next door she came over would you tell her I said I was going to visit my brother I was Steve I I heard about you on the radio thought the police would tie me in with it thought if I took the money and hit out until I heard from you sure sure it's a truth Steve here see I have the money here in this bag let's have a look that part adds up Doris nice of me to keep it for me Steve you've got to believe me maybe I will Doris maybe I will right now just keep quiet and drive go out sunset towards Beverly Hills sure Steve and don't worry I'll help you I know you will baby I know you will his manner terrifies you doesn't it Doris and you can't believe for a moment that he's satisfied with your explanation driving out sunset boulevard you make up your mind the police must get Steve Jaeger before he gets you at a stoplight at the corner of sunset in Doheny there's a slight grade just enough to make your car roll back when you stop for the red light you notice too that parked on the opposite corner as a police car perfectly carefully you ease your foot off the brake pedal let the car roll back toward the one in the rear take it easy we lost our first oh you little fool I'll see what I can do it's a tense few moments isn't it Doris Steve back trying to free the two cars you wondering if you can reach the police or if you dare call out to them and then you notice that one of them has started across the street to see what's wrong he calls out suddenly as Steve gets back in your car hastily Steve shoves you aside slipped behind the steering wheel himself Steve an officer he's yelling at us we're not waiting for him shut up will you look at louder here now through the rear view mirror you can see the police officer running for his car across the street he's going to make a chase out of it and a glance at Steve Jaeger tells you that he isn't going to quit easily doesn't it Doris the cars race along sunset a terrifying speed their tires screeching you beg Steve to stop to give up stop it will both be killed hang on we're not beat yet let him try that he didn't make it he went on past he'll be back but it gives us time baby time to swing in here you sit beside Steve Jaeger in frightened silence you're parked in the dark winding driveway of a huge mansion aren't you Doris with Steve taking a chance that the police car will miss you and race on past and then a moment later there he goes I told you baby we're not through you ride in silence for several miles and realize that Steve is pointed the car out toward the valley and then you look over at him and notice the blood on his hand Steve your hand huh oh it's from my shoulder those cops nicked me as I was going over a fence but ought to be attended to Steve of a bullet wound okay so we haven't taken care of lonely enough section out here yeah a little ranch house looks deserted enough I will see if there's anybody inside there's a life yeah come on up on the porch somebody home all right and quite alone leave us please doesn't need our us you move up beside them until you can see through the window as a young man sitting at a desk inside he's puffing slowly on a pipe staring at the typewriter before all right baby you know what to say he's coming oh good evening hello our car is stalled out front may we use your telephone oh of course come in come in thank you man what you have to do a baby what do you think that you're a gun yeah one that says you're gonna be a good boy definitely a good boy look if it if it's money you want it isn't thank heavens for that you alone alone yes yes quite a lot it's fine do as I say and you won't get hurt Doris draw the blinds all right where's the phone it's right behind you on the table that an extension in a little place like this it's absurd yeah I guess it isn't that I'll sit right here I keep my eye on that phone you stay away from it even if it rings understand perfectly good I suppose you get some hot water and something that'll do for bandages bandages oh a third member of the party perhaps lying mortally wounded in the car outside yeah I see you don't see get moving later Doris says you dressed the wound in Steve's shoulder you glance from time to time at the tall young man standing by quietly watching you there's the faint trace of a smile on his lips he seems calm unafraid and you're certain that if he were given the opportunity he could overpower Steve he's your one hope Doris what do you do Junior I do or I write what are you right oh you know where the crime doesn't pay sort of thing any good not pay what's your name maybe I read some of your stuff I don't think you have but my name is Anton gray sounds like something of a color chart it isn't funny if that's what you mean it's on gray you have a hero baby no I never have I guess we take it easy sorry you're about through that yep just about you got any fear and son no but there's some sherry in the decanter there get it yes of course you might see about getting something to eat cold corn beefs all I have it'll do all right Steve how does that feel fine just fine baby a glass of sherry dear lady no thank you here you are old man thanks now the grub huh yes right I want the moment I'd better help him Steve sure baby you do that but leave the kitchen door open huh Steve you don't think that I just leave the door open can I help oh I can manage rather interesting chap your friend my friend isn't it I never saw him before in my life oh I'm sorry I just naturally jumped into my car forced me to drive away I see and bread's in the box there do you mind Anton yeah he's badly wounded weak so we could overpower him it'd be easy if I forget it what I don't let this cool car make stereo fool you I'm not a very brave man really you're afraid of him and we haven't got all right baby hurry it up okay Steve and you're not afraid of him huh neither of us has to be he has a gun that automatically makes me a coward listen to me if I can draw his attention you could slip up behind sorry I am not the type what are you talking about in there let's get going with the grub yeah mustard or mayonnaise oh man Anton's not going to help you is he Doris and your one last chance of getting away from Steve is vanished but later in the living room a surprising thing happens Anton casually wanders over to a table near the front window picks up a cigarette and then slowly starts to edge toward the fireplace and suddenly you realize what he's going for the poker lying on the heart quickly you dig into your purse for a pack of cigarettes offer one to Steve thanks baby as you extend your cigarette lighter you see Anton pick up the poker start to raise it over his head in three short steps he can reach Steve cantidoris you hold your breath Anton doesn't move and then Steve leans back in his chair blows a cloud of smoke toward the ceiling Anton yes got any coffee a coffee yes hop to it yes yes of course your heart sinks as you watch Anton replace the poker on the heart drag himself slowly back to the kitchen a moment later you follow him why didn't you do it why I couldn't move his back was turned you could have easily know I know but I kept thinking suppose I miss suppose I miss he'd have killed me he'll kill us anyway but he said believe him look and he's a killer what good are we to him now all he wants to do is get away and he won't leave anyone around to tip off the police don't you see perhaps he'll just go away and we've got to get him before he gets us no I can't not even for $50,000 what he's got $50,000 on him I know if you were to knock him out we could have the money share it $50,000 yes the two of us and can we share it no one would ever know he stares at you for a moment then throws a quick glance towards Steve sitting in the living room and you're almost certain he'll do as you say now yes but he'll be willing to take a chance for a share of the $50,000 back in the other room with Steve you watch Anton closely no he's struggling to make up his mind finally you see him edge toward the fireplace again you know you've won to draw Steve's attention away from Anton you'll reach over and accidentally upset the sugar bowl Anton leaps across the room and brings the poker down hard you've done it you've done it he's not dead no you'd better hit him again what hit him again no I'm going to call the police police no you've got to kill me tell them about the money money I don't want any part of it I'm sorry if you thought all that an honest man disappointed yes yes I am wait a minute get back I have the gun now you'll do as I say yes yes of course tie him up hands behind his back use his belt whatever you say first reach into his inside coat pocket the money is there yes so it is give it to me $50,000 a lot of money isn't it give it to me I said you are now tie him up his feet to that lamp cord will do fine yes of course and then I'll trouble you for your car keys I'm I'm afraid you'll have to trouble the finance company what oh well you see my financial status being what it is you're lying if the carports right alongside the highest look out of the window you can see for yourself quite empty all right you drove up here in a car though didn't you so we did but unfortunately we had an accident and the police have a description of my car however now that I think of it I don't imagine it'll make much difference it's night foggy and if I do get stopped I can always tell them that Steve kidnapped me forced me to help him make his getaway they're sure to believe it I did at first hurry up with that will you all his hands are tied securely now high speed oh never mind never mind where does that door lead to him oh a closet good rag him in there hurry up now inside both of you yes as you say dear lady I hope you'll be quite comfortable it'll be the first time I've ever spent an evening in a dark closet but I imagine our manager you see yes I have enough cigarettes good I should kill you both but this way I won't face a murder rep besides all I need is a half hour start nobody will ever think of looking for me where I'm going as I'm sure you're very clever by the way is there a reward for this chap there is you might claim it I shall is there a reward for you too no not me so long sucker have fun with a reward they give you for the capture of the anger want to make a bet I'll bet that one of your most faithful friends has been completely left off your Christmas list your car Christmas you know is really a swell excuse to give the faithful chariot some of those things it's been needing things that'll pay you back later in extra driving pleasure what's more your signal dealer has just what Santa ordered for instance rugged new tires by Lee of concha Hawken to replace your smooth dangerous old tires powerful new signal deluxe batteries guaranteed a full 30 months on a service basis or how about a set of new champion or AC spark plugs for quicker cold weather starting and more pep these are just a few accessories from your signal dealers complete line which includes windshield wipers fan belts radiator hose light bulbs polishes and many other items you see signal service stations are much more than just headquarters for the famous go farther gasoline in addition each signal dealer carries a complete line of fine quality automotive accessories to help your car run better look better and last longer the fog that had settled over the Los Angeles area during the night had lifted now and the morning sun was shining as Lieutenant Avery of the Los Angeles police stepped out of the hospital room and walked down the quiet corridor as he reached the elevator a young man a member of the local press came forward to meet him okay lieutenant he must be pretty important for you to come all the way down here who is she or is Chandler Chandler the woman Steve Yeager kidnapped last night hey what goes she was involved in a traffic accident only she wasn't kidnapped was she hurt bad yes she'll be around here for some time a doc says but she'll recover in time to stand trial as Yeager's accomplishment she had the 50,000 he stole with her in the car well how did you stop her we didn't that truck smashed into the rear end of her car on Rosita Boulevard the bad fog truck drivers said he didn't see her in time to avoid the crash no tail light on her car no tail lighter that's his story that checks all right corner report turned in by squad car officers a Chandler woman's car was involved in a minor accident earlier last night witnesses said she deliberately backed into another car a Dohenian sunset that's when her tail light was smashed let that whistle be your signal for the signal oil program the whistler each Sunday night at this same time signal oil company has asked me to remind you during this busy pre-holiday season it's especially important to drive at sensible speeds be courteous and obey traffic regulations so that some avoidable accident doesn't mar your merry Christmas featured in tonight's story where Bill Foreman is the whistler Alice Reinhardt Jack Moyles Ben Wright Norma Varden Herbert Lytton and Bob Bruce the whistler was produced and directed by George W. Allen with story by Steve Hampton music by Wilbur Hatch and was transmitted overseas by the armed forces radio service the whistler is entirely fictional and all characters portrayed on the whistler are also fictional any similarity of names or resemblance two persons living or dead is purely coincidental remember to tune in at this same time next Sunday when the signal oil company will bring you another strange story by the whistler Marvin Miller speaking for the signal oil company stay tuned now for our miss Brooke starring Eve Arden which follows immediately over most of these stations this is the CBS radio network