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Technology Stocks : AUTOHOME, Inc -- Ignore unavailable to you. Want to Upgrade?

To: John Madarasz who wrote (19682)	2/16/2000 1:32:00 PM
From: ahhaha	Respond to of 29970

Most pros in the biz don't understand the mechanism. They just learn how to use it. It isn't important to know these fine points. When you're on the floor you can't be studying computer analytic outputs. You have to react to what is happening and stay within a certain discipline. What this activity approximates is a random process and so observing it through artificial devices like L2 exposure of the B/A away, is equally random. No one has been able to use such information to benefit persistently. Similarly, when you're on the floor you have to do your job and get on the other side of the public action. Hiding in the bathroom when the annunciator calls won't do. If these guys who watch L2 could see the myriad of MMs sitting at terminals monitoring their counterparts, they'd see it's absurd to hope that there's help there. Consider a stock like ATHM receiving an activity rate of 30 trades per second. It is impossible for an MM to do much of anything but to follow the rules. That's what they all do. They have no idea as to whether their latest action is correct. They have no idea whether a given day is profitable for them and their only hope is that the rules will make them successful. Since the rules mean to get on the opposite side of public excesses, necessarily there is a positive expected return in it. The MM job is just that. You crank the crank. When you hear all this bilge going on about how the MM is doing this and doing that, all you're hearing is public stupidity. The public should be blaming other public lunatic greed driven wild man trading. The price structures I discuss or their associated causes are abstract because they operate in a world of averages or on-balance effects. This business is immersed in stochastic processes. They are inherently uncertain. Therefore a data stream doesn't have much value over short runs. What is short run? Or sufficiently short? That itself is indeterminate. It's necessary to start with an assumption of random process and try to build a model that provides information by revealing what the intrinsic action is. All this intrinsic action represents is the expectations for future earnings held by all players often unknown to them. This element of truth resides in everyone and yet they don't even know it, for a stock also moves by what isn't done to it, what isn't traded. This is the infinite complement space that closes the finite rational expectation space which must have appropriate asymptotic limits to be meaningful. Where do you see this realized? Lx. When the B/A is outside the last trade.