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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: BGR who wrote (55039)	4/7/1999 5:56:00 PM
From: Michael Bakunin	Read Replies (1) \| Respond to of 132070

Unfortunately, this is possible. Let us say that we have a closed economy, just you and me. I float 100 shares of myself at $1, retaining 900 (say I have $1000 in the bank). The next day, I rue the day, and buy 50 shares back for $2, which I cover with the money in the bank. So, our economy still contains $1100 cash, but our 1000 shares of me are "worth" $2000. Expand to millions of traders... -mb

To: BGR who wrote (55039)	4/7/1999 5:58:00 PM
From: Mama Bear	Read Replies (1) \| Respond to of 132070

"Market makers make most of their money from spreads." That's not as true as it used to be before the advent of ECN's, and the institution of the Manning rules on Nasdaq. It used to be impossible to buy at the bid or sell at the ask, but is rather commonplace nowadays. The only real advantages the MM's have anymore is that they can see buy or sell side order flow coming in on Level III, and their experience as traders. Commissions are a separate issue, IMO. If these houses require counting the commission to show a profit, they're losing money trading it. I'm not sure I agree with your zero sum game analysis. I suppose if you regard the loss of unrealized profits, it is so. But the stock market is not like the commodities market, there are not an even number of long and short positions. Did the fellow who bought my short at 10 5/16 lose money? What if he holds the position and the sells in a year for 15? Did the trader who sold me my cover lose money? It could have been bought at less than 9 this morning. Did ELON's announcement make the shares more valuable today? The stock could easily have been bought for 10 1/4, and went out about 12 1/4. Did the trader who sold at 10 1/4 lose money? Even if he bought it at 8 not too long ago? I know some shorts lost money, but I'll bet that they were outnumbered by long positions in substantial numbers. So where did all the profits come from? Of course I do go back and forth, and some days regard the entire thing as one huge parimutual poker game, in which case I agree with zero sum minus the house cut analogy. I actually don't see myself as above average. I have a talent that I use to make my living. It's my opinion that the average person has some talent which they use to make a living. I have I guess I do find it a little insulting that some folks insist that I can't do what I do. But, that's my inference, so I'll get over it. Barb