| | | Exactly right. Their business model is predicated on stoking volatility. The more vol., the more they can make taking the other side of the vol trade. On the way up, they trade against greed. On the way down, they trade against fear.
The sell side facilitates the vol. in exchange for order flow to their trading groups. The sell side offers notes that are internally inconsistent, stoking short term fear while maintaining longer term price targets. There is no accountability for being "wrong" on the short term calls because to their constituents, the objective isn't being "right", it is stoking volatility.
With high speed algorithm trading and the internet to more broadly disseminate fear, volatility has never been more lucrative for the institutional trading entities. Add in the SEC impotence, paving the way for regulatory open fields (think repeal of the positive uptick rule as one example), and the individual has no chance unless he/she chooses not to play by the institutional trading rules.
Be circumspect in the use of leverage. Minimize trading. Know what you own. |
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