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Non-Tech : bad experience in Charles Schwab recently
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To: ams who wrote (25)2/25/1997 7:02:00 PM
From: Geoff Nunn   of 124
 
ams,

Thank you for your lengthy response to my questions. I found your comments quite helpful and believe I now understand SOES better. Let me react to a few specific points where I think we view things in a different light.

Re Market orders:

You said, " If it's a NYSE or AMEX stock, the general rule is what you would expect. If the stock is moving or you expect an imminent move, use mkt." By moving I would assume you mean moving within a trend and not in just any ole pattern,e.g., oscillatory, sawtooth, higgledy piggledy, etc. If you can see that a trend is underway, using mkt. orders make sense. But how does an ordinary investor discern a trend for what it is, except ex post? Price movements which appear to be trends often turn out to be reversals. Spotting a trend ex ante is a lot easier said than done. By the time you recognize it it may be too late. You're free to jump in at any point but don't know if the next market move will be a continuation or a reversal.

Let's assume that notwithstanding the foregoing argument, some investors are shrew enough to spot trends that are developing and profit from them. Assuming competition among trend spotters these trends would have short durations. The resulting price pattern in that case would become rather chaotic and random would it not? The question in my mind is under what circumstances should one use market orders when the presumption of random and chaotic price movements can be made.

Unfortunately, I don't have time at present to complete my response but will come back to it. sorry for the abrupt ending. And thank you again. G.N.
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