Maybe Ben is right.
Maybe we should call in our certificates.
It does not change our freedom to act one iota. It does change the Market Makers' play money significantly.
The MM's do need to make a living. Without them we would not have a market.
But I see these guys every day (pit traders, salesmen, etc.), and they do not inspire me with any sense of fear and trepidation of a greater intelligence putting proper valuations on the future, or of having the remotest inkling or interest in what our resources should be backing.
They are odds players, pure and simple. I wouldn't buy a car or vegetables from them. I'd shy away from asking them where to catch a cab! Thoughtful money comes later. More conservatively, and that makes sense, but it does not make thoughtful money very insightful, just very careful.
I've been in the market for many years and profited from it. Lately I'm even thinking about trading it for a living and so far I'm glad I have my day job, but today, anyway, I'm still making a little money. But I'm making it in the stocks I believe in and the professional market does not. Like Apple.
I spend a lot of time thinking about who actually makes up the volume on the exchanges, in the stocks, and I don't have a recipe I can share with you yet, but I'm pretty sure a very large percentage consists of daytraders - MMs 25%, Cowboys 15%, Ranchers 20% (I'm not sure who they are but lets call them the usual suspects), Institutions 35%, Investors 5%. In the large cap stocks that's okay - they provide liquidity and thus price changes that enable individuals to get in and out without getting slaughtered, by and large.
And the hot money can not significantly impact the long-term success or failure of a company worth billions of dollars. (Although I think there are tiers of intelligence and even major companies are easily played for a few points on millions of shares on a weekly basis). But in small cap stocks where the float is what? $2 Million, $4 Million? That's pocket change! They can use these companies for target practice (you think they teach this stuff in college?). Especially those that have real long term prospects and thus attract real investors, real dollars that get put into the pot and do not get withdrawn on the next 1/8 of a point. In the small caps, excluding the latest rage.com, I think it is something like MM's 90%, Cowboys 8%, investors 2%.
Meanwhile, the market capitalization of these companies is critically important to their ability to obtain loans to grow their business and to present themselves as a long-term partner in the common ground of the mission.
So maybe it would be educational and valuable to take our chips off the table and see what happens.
I just ordered (quite belatedly) the Thinkology CD which I will roadtest on my son - who is a little young but quite adamant on what works for him and what does not. Assuming he finds Ben's characters appealing, I'm disposed towards making the effort of a phone call to get my certificates in-house and probably hang them on the wall as an objet d'art and contemplation.
But I would feel better about this idea if some of you expressed a similar inclination and shared your thoughts. I read thestreet.com every day now. I find it very congruent with what makes sense to me.
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