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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade
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To: peter n matzke who wrote (1258)7/15/1998 9:40:00 PM
From: AHM  Read Replies (1) of 2120
 
You could not be more wrong in saying Market Makers provide no service to clients. Perhaps you had a bad experience. Let me tell you about a good one. About a year ago I purchased 60,000 shares of a NASDAQ development stage company at an average price of 3 3/4. It never saw that price again! About 2 or 3 months ago (I don't recall exactly when) it moved from beneath 2 to 3 1/8. Now that's a lot of shares to get out in a market that was trading around 90,000 - 110,000 shares a day at that price level (which only lasted for 2-3 days). For 1/16 the market makers at my firm (a highly regarded regional firm) got them all out at an average net to me of 3. Crooks? Not at all! They did an incredible job! Right after the last sale (at 2 7/8) the price of this stock plummeted and is once again beneath 2 where it will probably stay until the company disappears from the scene (which I absolutely believe will happen). These market makers accomplished this by calling every major investor they knew about who held large positions (I imagine positions that were assembled when it was beneath 2 or in the low 2's) to find those who still had an appetite for more. They worked incredibly hard for their 1/16 and did an honest and magnificent job that minimized what would otherwise have been a catastrophic loss.
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