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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Clarksterh who wrote (12031)	7/5/1998 7:24:00 PM
From: Maurice Winn	Read Replies (2) \| Respond to of 152472

Sure Clark, Speculators reduce volatility because they buy at the bottom and sell at the top. Those who fail to do so transfer their money to those who dealt with them and they are out of business as speculators and have to go back to working for a living. The successful speculators reduce volatility by the good old irrefutable law of supply and demand. If they buy at the bottom they stop the thing being bought falling even further in price because if they didn't buy, it would fall until somebody else stepped in and bought. Similarly, they sell at the top, and if they didn't sell, the price would go even higher because the non-speculating sellers would not offer to sell, ergo, the price goes up until somebody does sell. People who buy shares for the dividends [me] and houses to live in [me] and paintings because they like them [not me - we have our children's art work around the place plus cheap prints] are not speculators. Speculators buy only to trade on the gap between lows and highs. They are despised, in my opinion, because of envy on the part of the stupid who are unable to understand much of anything but resent having to get on the motorway or train in the rush hour for 40 years of their lives while others seemingly effortlessly retire rich. When Mahathir connived his way into power, he had fantasies about how great he was and what he could control. Companies borrowed heavily with a view to getting rich, from stupid banks who were unable to assess risk and economic probabilities. Speculators assessed the position, decided the banks, companies and Mahathir were up a gum tree so speculated accordingly. Sure enough, they were right and Mahathir was wrong, so they all went down the gurgler and the speculators made heaps. But this is not a neutral, level playing field. Governments hold a wild card - they can choose to print or not print lots more money. The speculators are hunting a hunter, the most dangerous of occupations, guaranteed to see somebody meet their mortality. So, when the Reserve Bank suddenly announced a buying of Yen, contrary to what many speculators believed would happen, those who bet wrongly were in woe! But even though governments get this currency advantage, they are still bound by the laws of politics and getting votes. The most dangerous hunter of all is the speculator who hunts other speculators. D E Shaw and co being a good example. When a speculator hunter hunts a speculator, it is like a worldwide game of chess, with the complexity infinite. Kasparov versus Deep Blue is simplistic by comparison. Each will build algorithms which include their own algorithms in the feedback loops which predict what other speculators will do. They are not only modelling herd market behaviour, but competing speculator behaviour, which will vary according to the competing speculator's perceptions of them. A kind of Web based Algorithm Wars in the stockmarkets, currency markets and any other markets. The best model wins and the owners get very, very, very rich. The SI day traders are babes in arms. Prosaic investors like me are okay, because we buy at a low and hold forever, leaving it to the algorithm warriors to decide on the highs and conduct a trading campaign. The SI day traders will [half of them at least, but probably 70%] lose their money because they can't pick the peaks and troughs as well as D E Shaw and co. You sure are right that the more traders there are in a stock, the greater the volatility because the volume is so high and to clear the market takes a lot more price movement. Also, because of their nature, the traders initiate momentum moves more than boring people like me who just sit. Those are exactly the best places for the best traders to go hunting. Not much fun for them to go hunting me in the Qualcomm field. I've never sold a Qualcomm share and have only bought at all time lows [other than my last little effort at $52 just after the crash from $72]. You'll find them in the high volatility stocks with big liquidity [that's my theory anyway - I have no evidence other than circumstantial]. Such as Qualcomm. I suppose 'heroes' is not really the right word since they are just like any other person trying to maximize their financial position, but they do perform an essential service. They buy in the gloom and doom times when people are desperate to sell. They sell when people are irrationally exuberant. Not heroes, but a very valid part of the commercial world, not deserving of negative emotionalism. What do you reckon? Fair enough? Mqurice - I'd love to be a speculator.