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Strategies & Market Trends : ZenWarrior's Trading Paradise -- Ignore unavailable to you. Want to Upgrade?

To: p40warhawk who wrote (380)	4/5/2001 9:57:00 AM
From: manfmnantucket	Read Replies (1) \| Respond to of 2462

good morning p40 ! >MOST of us deal through a market maker If we send market orders, someone has to decide what price we actually get - that's where MMs matter. Otherwise, the whole MM issue is immaterial!!! MMs do not have any special connection with shares they stock. They act as traders, going long and short for profit, using the same pool of shares as everyone else. Hopefully they also offer to buy and sell when no individual wants to take the other side of a trade, i.e., to "make a market". >>don't you borrow the stock from your broker, NOT another stockholder Again, an immaterial distinction - they're all coming from the same pool of shares. The broker typically lends inactive shares from their or a client's account. >Did the broker have ANY defense when you decided to short that stock Defense?? Not sure what you mean, but let's say I short JNPR and he borrows the shares from your account - if you suddenly want to sell JNPR for cash he'll just borrow shares to replace yours so you can. It's possible but rare that there are no shares available to short, if everyone is trying to sell at once. >determine if there are moral considerations this question is interesting, for sure, but I think the reasoning so far is based on false assumptions. >>No way Zen could have known otherwise, because the numbers were quantifiable In the example, the participants all have roughly the same info available to them, just as in life. They make different decsions based on that info. MfN sees a pattern in prices that suggests a limit has been reached, and notices Nomar rubbing his wrist... Zen and P40 see the same things but interpret differently. >a company makes its shares available through a market maker or other avenues. It does so because it needs investment money NOW. It offers the stock at its CURRENT market value again, no - the company only gets $ at the IPO or registered secondary offerings. >It isn't zero sum, and it isn't a game Not a game perhaps but a "zero sum game" is one where one wins at the expense of the others. I just demonstrated that it IS zero sum and nobody refuted it. The cash in the example room stayed at $29 - there was no magic. The only "wealth creation" was for MfN, as cash migrated from other pockets to his :-) That IS the way trading works - long or short. Money keeps flowing into the market, but there's a limit where folks are fully "invested" and no more $ gets printed. Last year, it reached something like 53% of US households - a historic high... and at 5K there was nobody left to sell to at higher prices, so "pop" - here we are. >I wonder if you would argue in favor of gambling in Las Vegas The mechanics of money transfer are identical - one gambler's loss is another's gain, - but the odds are extremely against the individual and favor the casino. With stocks, there is much more information available about potential price direction. Price patterns repeat themselves. Business and seasonal cycles repeat. etc. This is a fun debate... tell me what you think about the "moral" side of the following: I am writing a computer program that makes N trades per year, both long and short. It has no knowledge of anything besides TA - prices and supply/demand. It makes a nice profit. This profit comes out of the market, at the expense of other participants, since the money supply is finite. Is that immoral?? MfN

To: p40warhawk who wrote (380)	4/5/2001 3:25:37 PM
From: FLACK	Read Replies (1) \| Respond to of 2462

Moral Schmoral. p40 "Or, I might say, "Son, it would have been much bigger, but those sharks on Wall Street stole most of it." Or, because you are an honest and moral person, you could tell him straight out, "Son, I allowed my personal morality to cloud my perception of the market and thereby restrict my investment alternatives." The market owes us nothing. It's rules do not say that short selling is immoral. That's something that you're attempting to impose upon it. p40, when I decided to begin full-time trading, I checked my morals at the door, along with my emotions. Warren Buffet and a few of his ilk aside, from what I've observed, emotional and ethical traders become losers because they refuse to acknowledge: A. That this is a cut-throat game B. That this game is stacked against them by the institutions C. That we can't change the rules to suit our ethics D. That the market doesn't care whether you win or lose I understand your moral position. I just think it's misplaced in the market where morals are just a sign of weakness. Not that I like that, but that's just the way it is.