late show: how little guy missed mototola action.
what follows are excerpts from the july 11 1996 issue of wsj -
heard on the street.
in this after hours market, without a trading floor, specialists
or specific market makers, big players haggle back and forth
in an attempt to escape from - or acquire - stock while the major
market places like the nyse and the nasdaq are closed.
"it's mostly institutional clients doing the trading," says lou
bellucci, head of the equity division at jefferies & co., one of the
largest aftermarket-trading operations. "what we are doing is just
searching for a buyer to match the seller, or the other way around.
since the primary market is closed, we'll usually do most of the
business in stocks that have news surrounding them, like mototola."
One reason individuals get shut out of after-hours trading is that
trading operations like jefferies cantor fitzgerald l.p. and
jones & associates usually take orders no smaller than 5000
shares. for motorola, even near tuesday night's lows, that's $280,000.
another is that the securities firms that engage in after-hours
trading do most of their business with institutional investors.
the brokers say there's a reason for that.
"this is not the kind of trading activity for the faint of
heart," says RICHARD SCHENKMAN, executive vice president with
reuters holding's instinet, a broker-dealer that operates a trading
system both when the primary markets are open and closed. " for
instance, the person who sold mototola at $60 feels terrific, but
the guy who bought it there might not be feeling so great. that's
why it's important that the participants in the market are
sophisticated investors with a real need and reason to execute."
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there is more, but i think we get the idea.
faint of heart? sophisticated? might not be feeling so great?
this is insanity!
these guys need to cheat in order to take our money, since
they aren't smart enough to take it straight up.
less than a month before this fiasco, there was a brokerage
house upgrade of motorola for "no apparent reason" it was
announced twice on CNBC, in 30 minutes, one morning . at least they
gave us all a clue. i think i have a new investment scheme
that requires no research on my part. i will short all upgrades,
and long all downgrades.
an interesting thread might be to track
brokerage houses grading verses short term performance.
getting back to the subject,
i think we should urge investor relations, at companies we invest
in, to announce earnings during day trading hours.
also, i think "soes traders" have a bad reputation. but aren't they
the ones that fight the MM spread by grouping many investors trades
into one large block in order to get the best price.
one more thing! the market opens at 9:30. individual investors
cannot trade until 9:45. this is so the specialists and market
makers can get an initial "feel" for the way the market is going.
i think i need a drink!
anyway........ |
