<<<As a long in amzn and other internet stocks, I'm finding the pattern
this quarter a little disconcerting. In past quarters, the typical
pattern was a runup up to earnings, most stocks hitting all-time
highs, then a dramatic selloff after earnings and all the news was
out. Then a repeat the following quarter. This time around, international events got in
the way, so we had an "abnormal" correction mid-quarter after the Russian news,
followed by an "abnormal" recovery after AG's second rate cut, and now
"unnatural"
quiet after what most consider to be excellent reports from bellwhethers yhoo and
aol.
With the possible exceptions of yhoo and ebay, new highs from here
do not look likely for most internet stocks this cycle. Likewise,
AG's support of the economy in the form of future interest rate
cuts provides support on the downside. Thus, I expect the post-earnings correction
for internet stocks this quarter to be
less dramatic than normal. Which also means that I benefit less
by selling now to take advantage of internet stocks' cyclical volatility. Which means
that I will likely hold up to next quarter's
reports and yawn now that the internuts are behaving more like "normal stocks....>>>
The existence of the specialist's Investment and Omnibus Accounts is ultimately detrimental to
the public. "In a stock with only a small capitalization or floating supply, the segregation of large
blocks into long-term investment accounts for the specialist further decreases the supply of the
stock available to the public" (1Ney, 61)
The specialist has absolute control over price. He can match the buys with the sells in any way he
sees fit. He can raise the price of the stock 3 points in three trades, and open the next day down 5.
The seeming unpredictability of stock prices is due to the fact that prices exist at the whim of the
specialist. A stock is only worth what the specialist is willing to pay for it at the moment. The
fluctuations you see are, in fact, the evidence of how the specialist is working out his inventory
problems to meet his short-term, intermediate-term, and long-term goals (2Ney, 172). The
specialist will sometimes 'leap frog' his prices up or down, creating a gap. This is done to keep a
group of investors from buying or selling at a particular price. 'Leap Frogs' show specialist intent.
NEWS AND FINANCIAL REPORTING
It is highly unlikely that we will see news reports critical of U.S. stock exchanges, or of the
specialist system. There is a simple reason for this. All news organiztions are corporations and
do but reflect their management's views. Corporations that own media have specialists
influencing the choice of management. Newspapers, magazines, and television are but extensions
of the corporate world.
When Richard Ney's first book, The Wall Street Jungle, came out it was on the New York Times
best seller list for 11 months. Yet the New York Times would not review it. The Wall Street
Journal refused to take an ad from a New York bookstore that featured The Wall Street Jungle
(2Ney, 30).
All three of the major networks were wary of having Ney appear. NBC banned only two people
from appearing on the Tonight show with Johnny Carson: Ralph Nader and Richard Ney. Not
only do large banks, brokerage firms, and corporations advertise on television, they also are the
largest stock holders (2Ney, 33- 34). |
