Although my knowledge is vast and far reaching, I have been unable to fully understand the stock market and the reasons behind the tremendous volatility that seems to be inherent in the system.

UP
DOWN
UP
DOWN
UPDOWNUPDOWNUPDOWN

I have a theory that I wish to propose to all you fine people... I think that investors are too timid to stay the course. These "day traders" fuck the whole thing up with their $5 trades done on the internet at the square of speed of light.

*in the mind of the armchair investor*
Buy, sell... sell, buy... sell... I don't know anything about the market, but I like to feel like a bigshot while trading stocks. Look, mom... no hands! I am trading stocks like the big boys!!! Do you think I will get a seat on the exchange?
*end investor fantasy*

The big traders on Wall Street are not interested in anything other than their commissions, so they will go right ahead and help the market go up and down like one of those demented birds that dunk their heads in the water glass over and over in a mindless, repetetive frenzy of futility.

The stock market is a farce, so says Stanley Applebaum.

The stock market is forward looking--DECADES forward. If you could predict in 1998 that a little site like EBAY would become the 30 billion dollar behemoth that it is today, you would be smart to buy that stock, because, ultimately, the price will settle down on the actual value of the company in the long term.

But then you get a real idiot elected president and he threatens to destroy the economy with idiotic taxes and what might become a 30 billion dollar company 10 years from now will only become a 5 billion dollar company--and so there's far less reason to buy stock and so it stagnates.

Likewise, if it looks like international trade relations are breaking down, either because of stupid tariffs or ::gasp:: war, you again threaten the prosperity that these companies depend on for growth and you get a volatile DOWN move.

Since you're fucking with 20 years of future growth, one little news item can cause quite a stir. If corporate tax rates are going down by 5%, permanently, this adds up to a lot of cash over 20 years and the market prices it in immediately with a volatile UP-tick. And it not just a static 5% cash savings for the companies in question--a tax cut also means economic growth across the board, which means more business in general, and it all gets priced in.

Day traders have no effect on final prices; they make prices jiggle during the day, yes, but more importantly they provide the "grease" that is needed for other investors to make moves. And when they see a big broker make a sneaky move, they jump on the coattails and buy along with the tide, further moving up a price, which actually helps make the big house's move more obvious to the general public. It's all good. It's all information, ultimately information about the future of the economy.

As George Gilder says, "the stock market is the real economy." If the stock market is down, this is a signal that economic policy is headed in the wrong direction. I like to think of the stock market as the 4th branch of government--a check against stupid policy.

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[This message was edited Fri Apr 4 8:15:32 PST 2003 by teller]

Well this sure as hell beats some of the threads you gentlemen have been involved in latly!

Stanley Applebaum is right, the giant squid is the enemy!

Stanley's right about the arm-chair investor. Back in 2000, everyone mistook the bull market for intelligent investing. But then most of these people lost an assload of money during the crash, and no longer feel like bigshots anymore. At all. :LOL:

teller said:

YES!

DOW



SEE???

It's much smoother when you zoom out:

teller said:

Don't ever do that again!

How do you explain this one, Teller???

IceNine said:

Actually the NASDAQ paints a more vivid picture of the current recession. Take a look at the that big CHOMP our government has taken out of the future economy: