Without market participants who undertake a responsibility for providing liquidity, the "regular guy" who wants to buy or sell a few shares of Podunk Steel & Bagel is going to have to become accustomed to some trading inconveniences.
Good point, Brec...but then you have the flip side of the coin. I own a stock that has a float of two million shares. There are 2,400 shareholders, meaning that each owns less than 1,000 shares, on average. I own much, much more than that, and know others that have even more than I do, so I know that most "little guys" out there are holding very small lots of this penny.
The stock (HTSF) began a runup in January from 20¢ to $1.75. During this time, there was a reasonable amount of selling, but nothing to match the buying of over 1.5 million shares during 1/15/99 to 2/16/99. If I had to guess, I would suspect that few, if any, of the small shareholders were selling, leaving the relatively few large shareholders to do the selling, half of whom did, the other half holding.
We now suspect that the MM's for our stock are short more than 1/2 the float of this stock, and going shorter by the day. What this has resulted in is MM mind games, and blatant manipulation as the MM's try to instigate selling, and get the stock down to a lower price to limit their liability.
If the MM's were replaced by a computer, then would this situation have come about? Or would the computer have set the bid at $10, attracting sellers, but no buyers?
Are the MM's, by going so severely short, doing their part to make for an orderly market, and I should just accept their hijinks as par for the course?
Not sure how the computer system would work, but I can't see a computer using psychology to frighten people. <g>
Rick Williams |
