by Yin-Yang Tue Nov 22, 2016 10:48 am
Gents,
Stock market is a live Eco-system, not a dead machine.
There are 3 types of living beings here; Grass eaters, Predators and Scavengers.
Grass eaters are big herds searching for green grass.
Predators are ruthless killers awaiting for eaters to come near the grass.
Scavengers follow predators and feed on remaining of grass eaters.
++++++++++
Shoeshine boys aka general public are made to believe that the market is driven by various types of parameters, be it related to company performance, macro economic trends, political decisions, crowd behavior ++.
But the markets are driven and controlled by big players.
In the first place, the very reason for markets to exists is to serve big players' needs.
Markets are not created for you and me to earn money; but to make a platform for a big player to collect money from the public while keeping the business control to himself.
Do you boys think that; if a business is earning super profits, the owner will decide to list that in a public exchange?
No boys, only when the company has come to end of its growth and only when the future looks bleak; or if someone is in need of some quick cash, the owner would decide to list the company in the stock exchange.
+++++++
And, after listing also, the market is driven by big players.
Imagine the situation where, a big player wants to buy a big chunk of a listed company.
Would he just jump in to the market and buy that?
Nah!
Instead, he would wait; wait until the company report some bad performance, report some losses, wait for some bad news to appear, wait for the General Public to get frustrated about the company, wait for all negative predictions, wait until all shoeshines boys to start selling.
That time, he would start his actions; he would let all SS boys to sell to him. Once there are no sellers to go beyond a limit, what would he do? Then he would start buying the remaining shares in the market.
At that time, all predictions start to fall apart, All P/E s get stuck in the thoughts of predictors. The SS boys cry of manipulations.
+++++++
What if some big player want to dump a big chunk in the market? Would he just start selling?
Nah!
It would drive the market price down and the big player would incur losses.
Instead, he would slowly wait until the company generate some sexy reports, some heavenly news to appear, some fantastic shoeshine predictions to be generated, and all general public to go after the company shares in a big mad rush.
That time, he would slowly dispose his shares to the buyers.
Once there are no more buyers beyond a certain level, he would start just selling to whatever buyers in the market. That time, the market price would fall down, shattering all shiny predictions.
Again the P/E s get stuck in the other end of the thought of the predictors.
+++++++
Now, some shoeshine boys might come out and say "the markets cannot be controlled by any party for a long period".
Of course, who wants to control the market once his need is full filled?
+++++++++
Now,
Who else can benefit from the market apart from big players?
There are scavengers my friends.
The scavengers go behind big players and feed themselves of some left overs by big players.
General public have two parties; one party obsessed with historical data, the other party crave for future performances. Both will be ultimate losers.
The big players and opportunistic scavengers, who live in the present moment will be the momentary beneficiaries.
+++++++
I would not buy Gold nor Silver as a commodity since I cannot consume them. But might consider as a trading mechanism.
If I were a big player of Gold, I would fund a research to prove that wearing Gold is the single biggest cause behind all types of cancer.
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