Market making revisited.
Where is the market for your stock? Some thinks that is the other buyers or sellers, some where out there. Others think that you have to deal with a market maker, when there are no buyers or sellers at the moment you want to invest or divest. Then there are people that think you have an account on internet, you buy and sell and make lots of money because commission is cheap. The last group is the closest to be correct. You buy and sell to your broker where ever they are, internet, discount or full service. The real transaction is transparent to you; you don't have to know.
The real transaction goes through up to five Nasdaq dealers handling the same certificate that will be in your account but in street name. Three dealers in the NYSE and AMEX.
So, deal with anyone, that is the market. Theoretically, market makers make a market by promoting the stock to a wide audience of investors. They are, however, limited to the customers in each brokerage. The exchanges connects all the brokerages. Internet brokerages are usually very small, your money is used to bet against you. This concept is hard to take. On the other hand, if you made money; who is paying you? "Who is paying you?" concept keeps you out of fooling yourself, in the stock market, in the commodities market, even on the main street. |
