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Program trading hijinks

Discussion in 'Economics and Financials' started by padre31, Jun 26, 2009.

  1. padre31

    padre31 Premium Member Luxury Box

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    http://market-ticker.org/archives/1165-Market-Gaming-Pressin-Their-Bets.html

    If I am grasping this correctly, the huge "investment houses" are increasing their trade activity on the up and the down side of a stock, thusly hoping to hedge their investments.

    But such trades are almost half the total volume of the NYSE, basically those huge banks can manipulate the prices of their holdings?
     
  2. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    Not only through program trading can they manipulate the price of a single stock but they can also manipulate entire indexes if they are moving enough cash through stocks, and indexes across multiple sectors.

    To be honest Padre, I still believe a good portion of the market runup in the last few months from our previous lows has been manipulation by a few big firms and not indicative of investors coming back into equity.
     
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  3. padre31

    padre31 Premium Member Luxury Box

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    Like "central banks" purchasing our T-Bills, it's an illusion not genuine economic activity occuring in the private sector.


    Exactly, and here is a new phrase for the lexicon joeyd

    "Optimism Gap"

    The investor class is not buying it, the "general public" is, somewhat.
     
  4. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    You can fool some of the people some of the time, but not all the people all the time Padre and this investor is not buying it.
     
  5. padre31

    padre31 Premium Member Luxury Box

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    IMO, you are not alone in that JoeyD, to me there is a class of investor out in America that is not going to drop a dime in any new investments due to a number of factors, not the least of which is the new status of Bondholders.

    If a "sure thing" is no longer certain, and various initiatives are anti market, it does not take a genius to say "no thanks" no matter the inducements.

    That is the Optimism Gap, the small companies that normally rely on investors to finance the "next big thing" have been disincentivized and that will only grow worse.

    Over the next 5 yrs, with taxes and the new regulations as well as inflation, a investment must return a much higher level of profit simply to break even, that is unless there is a Govt subsidy.
     

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