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Non-Tech : Meet Gene, a NASDAQ Market Maker -- Ignore unavailable to you. Want to Upgrade?

To: Wayners who wrote (442)	8/5/2000 9:35:21 AM
From: LPS5	Respond to of 1426

Wow. 1. Not directed at market makers at all. Directed at institutions mostly... This is a new one, I must admit. I've long heard the humphump pabulum about evil market makers (oh!), but now, Wayne has submitted the following candidates for dark sainthood: Evil mutual funds Evil pension funds Evil banks (I suppose if you're a collectivist, this is already true) Evil insurance companies Evil corporate profit sharing funds and my favorite, the real puppy eaters: Evil COLLEGE ENDOWMENT PLANS(!) Yes indeed, call the National Guard; there's a balding, 50 year old guy in St. Louis/Boston/Denver/London calling a trader in New York with 500,000 shares of ABCD to sell over the next 3 weeks. What will we do? 2....[T]hose with huge amounts of money that they can't move so they have to rely on all the above forementioned "tactics"... First of all, Wayne, these last few years have provided never before seen opportunities - both in number and variance - for institutions to sink funds into IPOs, secondaries, convertible offerings, the whole gambit of depository receipts and ETFs, etc. The underwriting and financial engineering machine has never been as hard at work as it has been in the last 5 years or so, which makes your assertion that games are played because there are no opportunities out there ludicrous. In addition, this is a concept I think you need to grasp. Buy side firms (institutions) rarely, if ever, have their own sell-side components. First, because it's not their business; they are on the "decision and selection" side (vs. trading, or "implementation"). To do both, on the scale that they do, would be a distraction and an unnecessary cost to maintain and support. Second, by sending their orders out to various sell-side firms, they receive the benefits arising out of competing commissions, soft dollared research, etc. They wouldn't receive these benefits - nor would their hundreds of millions of constituents, among which are all of our mutual funds, 401Ks, etc. - if rather than shopping orders around, they had their own trading desks. Last year, the average buy side firm had something in the neighborhood of 25 executing brokerage relationships, for which their order flow can be discretionary or allocated for soft dollar purposes. A money manager or portfolio manager - the decision maker for a mutual fund or other institution - only doubles as the actual trader at a few rather small firms. So, I don't know what tactics you're talking about are even possible, LOL, unless it's a sexy tone of voice they use while giving an order to ABCD Trading or "influentially" faxing an invitation for a blind bid to a bunch of firms on the street. The staggering majority of true institutions are very heavy on the research and analytics and very, very light when it comes to trading tools. It's just not what they do or want to do, and not what their investors want them to do, either. 3. ...to churn out a measly 11% a year on average. Hmmm. :) Not sure what your point is, Wayne, but the average historical return of the broad market is 10-12% per annum. Please tell me, Wayne, that describing this term as "measly" doesn't infer your inclusion among the starry-eyed millions who've become a bit pickled by inordinate market returns over the past few milk and honey years ;) LPS5