OFF TOPIC,
Ray, as I understand it, the way market makers and specialists are supposed to work, is that they are meant to have a stabilizing influence. To stabilize the market, they should maintain an inventory of the stock they are making a market in and sell on the way up and buy on the way down.
I could certainly be wrong, and if I am, I am sure someone will flame me for it.
But, now enters short selling. Again, I may be wrong, but what I believe happens more often than not, is that market makers and specialists hold no inventory, and instead of selling when a stock is going up, they are selling short. And when the buying stops and the selling begins they start covering the short positions. I can personally not account for the wild swings in a given issue if that is not the case.
The MM's and specialist's, as well as the brokers, make money on every trade. Whether the shareholders make money or lose is of no concern to them. As has been previously posted, most of the MM's and specialists probably have very little knowledge of the company, it's financials, it's prospects, whatever. All they are interested in is trades, because that is where they make their money.
I've got to cut this short because of a thunderstorm.
Phil
I realize I am a rookie investor that is still trying to learn, and welcome all civil comments. |
