Understanding basic market operations

Now, what news on the Rialto?

Re: Understanding basic market operations

Postby Mr. Perfect » Thu Aug 27, 2015 4:51 am

Endovelico wrote:Mr.P,

Strictly speaking, you are right. Just buying or selling shares does not have to have any impact on stock's value. But if one is referring to a willingness to buy certain stocks which is greater than the supply of said stocks, then the price will go up.

Not exactly. It's so important to be precise when trying to understand problems and topics. The failure of the obama movement can be directly traced back to them never ever ever beginning to understand the problems they said they were trying to solve.

A market maker is paid on volume and spread, not price movement. As such, his only goal is to match as many buyers and sellers as he can.

He has order screens that show him all kinds of computer orders waiting to be filled. The methodology of doing this is complex to the beginner, but the concept is pretty easy. Eg, many orders are hedged by the market maker and stored as inventory. People think when they execute a transaction they are exchanging with another investor but this is often not the case. The market maker is often managing inventory.

Point being, if China decides to a buy a trillion dollars worth of stock over a week or what have you, they will take that business, but once that buying is over the price is then set by new people bidding on the stock. The previous expenditures on the stock have no bearing on new trades coming in after the fact. The securities can be bid in either direction, from zero to infinity with no regard to previous buying.

Further there is a fallacy of what we might call "moneyflow" indicators (pls google) which are a gigo model. If China buys a trillion in stock then idea is they "Added" a trillion to the market. This is a fallacy, because the people they bought from took a trillion "out of the market". It's a wash.

And point being, Naps et al is if the Chinese gov't understood this they absolutely would not be doing what they are doing.

It would be also enough for the Chinese government to indicate to the market its willingness to buy shares at prices higher than the last price quoted for the value of those stocks to go up. I presume that for most people if the Chinese government was buying huge amounts of shares on the stock exchanges, such an increase in demand might be enough to push prices up. But you were right in your comments.

Uh, what I think you are making is a confidence argument which is a different but related argument. Traders use sentiment indicators to try to measure this. Another popular one from the past is stock split announcements. But, my argument is over different time frames this is irrelevant. Eg, stock split companies often eventually stop splitting and perform so poorly they go private again (Dell Computer) or are perpetually lackluster (MSFT). So time frame is an issue.
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Re: Understanding basic market operations

Postby Mr. Perfect » Thu Aug 27, 2015 4:51 am

Zack Morris wrote:I'm amazed Zerohedge was able to hold out this long. It's been, what, 6 years? Not many folks profited on Monday (apart from the HF market makers). Folks have been predicting a sell-off for years now! Any retail investor taking on short positions on Zerohedge doom and gloom would have been crushed long ago. And direction neutral/long vol strategies would not have worked too well either.

Fantastic strawman. Well done.
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Re: Understanding basic market operations

Postby NapLajoieonSteroids » Thu Aug 27, 2015 10:33 am

Mr. Perfect wrote:So you couldn't repeat back what I said.


Oh yeah, is that so?
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Re: Understanding basic market operations

Postby Mr. Perfect » Thu Aug 27, 2015 11:08 am

Maybe you could point it out.
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Re: Understanding basic market operations

Postby Parodite » Thu Aug 27, 2015 3:07 pm

Mr. Perfect wrote:
Parodite wrote:Parodite/Nonc: "But there are controversies, issues. Front runners, flash crash questions. People who know things.. have contacts... and always pay less at the pump than others. Who play the system with tricks. Link [url]a[/url] [url]b[/url] [url]c[/url]"

And you guys were not able to substantiate any of those issues let alone explain them. At all. How can you debate with people who can't even explain their position. You guys couldn't even explain what hft is in your own words. You couldn't even cognate the subject matter.


Are you suggesting that the basics of HFT are so complicated that a 3rd high school grader can't understand them?

Mr.P: "You just don't get it! Everything is cheaper now, and people get faster where they want to be!"

etc

When the issue is that simple what else is there.


Nothing that interests you but that doesn't mean it isn't there.

My interest is more in the people who for instance hack computers or who outsmart a system just within the law and just outside of it; tricksters, swindlers, scammers, schemers. The financial industry at all levels, during all times and within any system is a treasure trove to find these type of folks.

The fact that HFT is good for liquidity and made trading cheaper is of no interest to me. It's just part of the automation of all industries and to be expected. There is no news there. There is only news when people, the usual like-minded crime-inclined suspects, try to outsmart a system under the radar.

Just as IT security companies love hackers for exposing vulnerabilities so they can perfect their system, so are scammers, swindlers and tricksters doing everybody a big service by exposing vulnerabilities in the financial industry.
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Re: Understanding basic market operations

Postby Parodite » Thu Aug 27, 2015 4:44 pm

Mr. Perfect wrote:
As for this topic. Are you saying that what the Chinese gvt is doing will not make any difference ultimately?

In regard to their buyback program yes it is an expensive exercise in futility. It literally will not work.


You saying what they are doing is expensive in the sense of wasting money, destroying wealth?
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Re: Understanding basic market operations

Postby Mr. Perfect » Thu Aug 27, 2015 5:13 pm

Absolutely.
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Re: Understanding basic market operations

Postby Parodite » Thu Aug 27, 2015 5:28 pm

Mr. Perfect wrote:Absolutely.


But how?
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Re: Understanding basic market operations

Postby Mr. Perfect » Thu Aug 27, 2015 5:33 pm

If you buy stock and it goes down you lose money.
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Re: Understanding basic market operations

Postby Parodite » Thu Aug 27, 2015 5:42 pm

Mr. Perfect wrote:If you buy stock and it goes down you lose money.


But I thought your argument was that stocks going up and down, gaps included, are the unpredictable order of the day. So whether they go up or down in the hand of holder a/b/ or c would not make a difference. The good news would be if at the moment of loss they are in the hands of gvt... everybody who hates big gvt must be smiling.
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Re: Understanding basic market operations

Postby Mr. Perfect » Thu Aug 27, 2015 5:56 pm

Right. If stocks go up they make money, if stocks go down the Chinese government loses like anyone else. There is nothing magical about their money.

The point I am making is different, that there is no reason to believe their stock purchases will have an effect of reversing a downturn. The downturn may or may not reverse on its own coincedentally, but it will be just that.

As far as predictability there is a false binary going on. Some will say that the future is unpredictable but they won't take my bet on the sun coming up tomorrow. Others say the economy is unpredictable, but human behavior can be predictable and economic behavior is human behavior.

Our ideologies determine our choices. I do not believe the stock market is "unpredictable". Like human behavior sometimes it is all too predictable.
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Re: Understanding basic market operations

Postby Parodite » Thu Aug 27, 2015 6:36 pm

Mr. Perfect wrote:Right. If stocks go up they make money, if stocks go down the Chinese government loses like anyone else. There is nothing magical about their money.

The point I am making is different, that there is no reason to believe their stock purchases will have an effect of reversing a downturn. The downturn may or may not reverse on its own coincedentally, but it will be just that.


But that suggests that no harm is done either. So no wealth is destroyed by these actions. The Chinese gvt might as well have farted in the dinner room to same effect; nill.

As far as predictability there is a false binary going on. Some will say that the future is unpredictable but they won't take my bet on the sun coming up tomorrow. Others say the economy is unpredictable, but human behavior can be predictable and economic behavior is human behavior.

Our ideologies determine our choices. I do not believe the stock market is "unpredictable". Like human behavior sometimes it is all too predictable.


Agreed with that. Predictable/unpredictable is not either/or.
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Re: Understanding basic market operations

Postby Zack Morris » Sat Aug 29, 2015 2:22 am

Parodite wrote:But that suggests that no harm is done either. So no wealth is destroyed by these actions. The Chinese gvt might as well have farted in the dinner room to same effect; nill.


Trading is a zero sum game. No money is created or destroyed, only shifted around. But as the economy -- and specific companies -- create wealth, their value goes up and should be reflected in the market price. When stocks are overvalued and collapse, like in China, it isn't because of any trading activity (whether private investors or the Chinese government). The "wealth" wasn't there and eventually, prices move to correct. Reality seeps into and overcomes the illusory dream world that was created. It can be a violent process, as we've seen the last few weeks, and the Chinese government has bet that it can manipulate the market in such a way to ease the melding of the two worlds. Obviously, it cannot really control this process.
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Re: Understanding basic market operations

Postby Endovelico » Sat Aug 29, 2015 9:14 am

Mr. Perfect wrote:I do not believe the stock market is "unpredictable". Like human behavior sometimes it is all too predictable.


Predictable? At your own risk... Mostly it is manipulated by those with enough funds to force the value of some stocks - or currencies - going up or going down. Most investors would be better off "investing" their money in Las Vegas... Most investors are too ignorant to have the slightest clue about what they are doing and why. They are like sheep being moved around by a good sheep dog... As far as I am concerned I would invest in the market only if losing the invested money would be totally indifferent to me...
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Re: Understanding basic market operations

Postby Mr. Perfect » Tue Sep 01, 2015 9:12 am

Endovelico wrote:
Mr. Perfect wrote:I do not believe the stock market is "unpredictable". Like human behavior sometimes it is all too predictable.


Predictable? At your own risk... Mostly it is manipulated by those with enough funds to force the value of some stocks - or currencies - going up or going down. Most investors would be better off "investing" their money in Las Vegas... Most investors are too ignorant to have the slightest clue about what they are doing and why. They are like sheep being moved around by a good sheep dog... As far as I am concerned I would invest in the market only if losing the invested money would be totally indifferent to me...

You may be surprised that I agree with you mostly.

One of the curiosities I've faced here, is most everyone who is not aligned with me ideologically considers me a braindead mental patient, and yet I've never struggled to learn anything about the stock market, and other markets. Ever. And it has been incredibly profitable to me. You guys would never believe me if I told you what I am worth. Especially after obama STPN. You guys handed me your money, I didn't want it, but you gave it to me anyway. I talk to my broker, I say hey there is WAY too much money in my account, is it going to run out of room? He laughs, just says it's little bits of information. I'm not sure...

Anyway these people who deride me as a chimpanzee struggle to understand the most basic concepts related to financial securities and markets. Most I am sure have never even opened and account or entered a trade. They just can't figure out the first thing about it. And yet I am a world leading expert across a spectrum of topics. And tbh it came really easy. Very little of it did I struggle with.

So I used to be an evangelist for retail investing, a real bootstrapper if you will, preaching the gospel of "anyone can do it". I have since moved away from that POV. Watching some people trade is like watching kids fingerpainting with motor oil, peanut butter, acid, and cow blood. It's just a disaster.

So now I think trading should only be done by the fortunate few, like me, who for whatever reason make up a very tiny segment of society that can cognate the subject matter. Everyone else should seek out people like me and we'll do it for you.
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Re: Understanding basic market operations

Postby Mr. Perfect » Tue Sep 01, 2015 9:14 am

Parodite wrote:But that suggests that no harm is done either. So no wealth is destroyed by these actions. The Chinese gvt might as well have farted in the dinner room to same effect; nill.

Well to start over, obviously the stock market can only do 3 things. Up down or sideways here.

But the assumption by the Chinese is that the dramatic fall of their indexes will continue, and I'm merely pointing out how and why their policy won't do what they think it will.
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Re: Understanding basic market operations

Postby Typhoon » Thu Sep 10, 2015 6:28 pm

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Re: Understanding basic market operations

Postby Doc » Fri Sep 18, 2015 10:53 pm

Zack Morris wrote:
Parodite wrote:But that suggests that no harm is done either. So no wealth is destroyed by these actions. The Chinese gvt might as well have farted in the dinner room to same effect; nill.


Trading is a zero sum game. No money is created or destroyed, only shifted around. But as the economy -- and specific companies -- create wealth, their value goes up and should be reflected in the market price. When stocks are overvalued and collapse, like in China, it isn't because of any trading activity (whether private investors or the Chinese government). The "wealth" wasn't there and eventually, prices move to correct. Reality seeps into and overcomes the illusory dream world that was created. It can be a violent process, as we've seen the last few weeks, and the Chinese government has bet that it can manipulate the market in such a way to ease the melding of the two worlds. Obviously, it cannot really control this process.


Film vs Digital images. Once upon a time camera film companies were highly profitable and there was no such thing as digital images. But it still wasn't a zero sum game. Products to take digial imagines have grown to be much bigger than the film industry ever was. Even as you have said above - wealth is created.
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Re: Understanding basic market operations

Postby Parodite » Sat Sep 19, 2015 11:29 am



Makes good sense.

When I think of basics I think of investors investing in products or services that will sell as in the series the dragons den and who know how to market it.

Methinks the basics are:

1) What people really need they will tell you. Modest money can be made.
2) If people don't really need something but you can convince them they do.. you can make much more money.
3) You can make astonishing loads of money with lying about, or concealing what you sell: dog poo for the price of gold.
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Re: Understanding basic market operations

Postby Mr. Perfect » Thu Jan 14, 2016 4:24 am

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Re: Understanding basic market operations

Postby noddy » Thu Jan 14, 2016 10:59 am

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Re: Understanding basic market operations

Postby Mr. Perfect » Mon Feb 01, 2016 10:55 am

Told you. If I've tried to teach you anything, it's elites at the highest levels often haven't' the foggiest idea of the subject matter in front of them.

A monument to colossal ignorance. You will pray for the deliverance of Jesus before long.

http://www.reuters.com/article/us-china ... SKCN0UT1OP

Blame, anger, frustration as China's stock rescue effort looks defeated

A Chinese government campaign to restore confidence in the country's volatile stock markets appeared to be in tatters on Friday as the benchmark Shanghai index wiped out all the gains made since the depths of last year's crash.

Among a flurry of measures, a so-called national team of institutional investors had promised last summer to buy and hold stocks on the index until it returned to 4,500 points - a level which at the time was considered in reach.

However, the Shanghai Composite Index .SSEC - the most closely watched by Chinese investors - fell through the lows seen during the depths of last year's crash and closed on Friday at 2,900 points - its weakest level since December 2014.

Irate retail stock investors crowded social media to gripe about Xiao Gang, the embattled head of the China Securities Regulatory Commission and threatened to sue state media for predicting a bull market revival rally that never happened.

"What hope is left in the stock market? Regulatory incompetence is creating starvation!" wrote one blogger posting as "Song Jiliang" on a microblog service.

"Ordinary people shouldn't pay the price."

The CSRC did not discuss Friday's stock market performance during a regularly scheduled press conference and it did not take questions from reporters.

Emailed requests for comment on the future of Xiao Gang - who faced internal criticism last year from the Communist Party over his handling of the stock market slump - were not answered. Calls to CSRC after business hours were also not answered.

More than $5 trillion has been wiped off the capitalization of the Shanghai and Shenzhen stock markets since they peaked in June 2015 - more than Japan's GDP.


It's amazing to be a teabagger, and be right about almost anything.
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Re: Understanding basic market operations

Postby Typhoon » Wed Mar 01, 2017 5:53 pm

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Re: Understanding basic market operations

Postby Zack Morris » Tue Jun 13, 2017 1:44 am

Mr. Perfect wrote:Told you. If I've tried to teach you anything, it's elites at the highest levels often haven't' the foggiest idea of the subject matter in front of them.

A monument to colossal ignorance. You will pray for the deliverance of Jesus before long.

http://www.reuters.com/article/us-china ... SKCN0UT1OP

Blame, anger, frustration as China's stock rescue effort looks defeated

A Chinese government campaign to restore confidence in the country's volatile stock markets appeared to be in tatters on Friday as the benchmark Shanghai index wiped out all the gains made since the depths of last year's crash.

Among a flurry of measures, a so-called national team of institutional investors had promised last summer to buy and hold stocks on the index until it returned to 4,500 points - a level which at the time was considered in reach.

However, the Shanghai Composite Index .SSEC - the most closely watched by Chinese investors - fell through the lows seen during the depths of last year's crash and closed on Friday at 2,900 points - its weakest level since December 2014.

Irate retail stock investors crowded social media to gripe about Xiao Gang, the embattled head of the China Securities Regulatory Commission and threatened to sue state media for predicting a bull market revival rally that never happened.

"What hope is left in the stock market? Regulatory incompetence is creating starvation!" wrote one blogger posting as "Song Jiliang" on a microblog service.

"Ordinary people shouldn't pay the price."

The CSRC did not discuss Friday's stock market performance during a regularly scheduled press conference and it did not take questions from reporters.

Emailed requests for comment on the future of Xiao Gang - who faced internal criticism last year from the Communist Party over his handling of the stock market slump - were not answered. Calls to CSRC after business hours were also not answered.

More than $5 trillion has been wiped off the capitalization of the Shanghai and Shenzhen stock markets since they peaked in June 2015 - more than Japan's GDP.


It's amazing to be a teabagger, and be right about almost anything.


It's fun to revisit this more than a year later and realize that the Chinese experts were right after all. China's interventionist policies have staved off disaster once again. It's not surprising, really. Even Donald Trump agrees the Chinese leadership is much smarter than ours. So perhaps we should cut costs and outsource governance to the Chinese?
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Re: Understanding basic market operations

Postby noddy » Tue Jun 13, 2017 2:43 am

wot ?

all the corrupt scammer ones f*cked off to places like canada and australia with the sweet loots and the market back home is now zombified and on life support much like the rest of the world.

same outcome as everyone, chinese exceptionalism is awfully normal.
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