Dear Joe, thanks for the "primer" in Market Making. It is a knee-jerk reaction to require blame to be placed somewhere when things are not going your way. I'm not waving the flag for the MMs: I've seen too many "games" played on issues, investors, and among themselves to believe they are wearing white hats, but on the other hand, your info is essentially true. They must respond to the supply/demand ratio to keep their jobs, and that is established by investors offering to sell or bidding to buy. We see a .02 move on 100 shares, while 20,000 go by with no change, and conclude they are manipulating the price. Sometimes we are right.
Somebody said, "We have met the enemy and he is us." If someone sells (or buys) at market (for whatever reason), they are asking to be the turkey at the dinner table. My Dad told me, "If you are about to sit down at the table to play poker and you can't identify the turkey, you're it!"
All the best, and thanks again,
M. |
