<Not angry, just sad for you. If fleecing the rubes is the way you want to live your life, too bad.>
CB, in defence of TJ, and speculators in general, they should be considered financial heroes, not crooks and spivs.
TJ forces nobody to trade. He operates within SEC rules and has voluntary adult counterparties who trade with him.
The service he performs, with great risk to his financial well-being, is to reduce market volatility. Market volatility is a bad thing, leading to extra costs, and even market collapses. The less volatility we have, the better.
It takes millions of speculators and umpty $billions to be risked to reduce volatility. Not only is he carrying the risk of trying to make money in a zero-sum game, he also has to pay spreads and sundry intermediaries to conduct his trades and then has to pay tax on the profits. All that cost and all he gets is any gains due to other people making misjudgments about values.
If nobody tries to sell at a foolishly low price, he will have to try to make money by buying at higher prices. By being a willing buyer, lining up with other competitors for a bargain, he ensures the seller gets a higher price than would be the case if TJ didn't take those risks and like me, lazed around at the beach, on the golf course, or ranting 90 to the dozen. I might buy the desperate seller's stock but at a lower price than the ever-vigilant TJ. That would not be nice for the seller. TJ ensures they get a higher price than would otherwise be the case.
He provides liquidity to the market and in the event of things going wrong in the markets in his portfolio, he carries the can. His bet is that he is right and the counterparties are wrong. He even pays for the privilege of taking that bet [by paying the spread, broker fees and taxes].
What a noble man!
Hooray for TJ and the courageous speculators.
Many speculators have failed, lost their stakes, gone back to work, or even taken their own lives. I know of one Sier who did that. It is not employment that anyone can take on. Most people are more sensibly employed in factories or providing services on an hourly rate.
Speculators should only invest the money they can afford to lose. They come into the category of philanthropic investing = high risk investing which benefits the community but could well see them lose their investment. You'll mostly only hear about the successful ones.
Mqurice |
