Re: cash ,,,,

["Nchrisc" <nchrisc@xxxxxxxxxxxxx>]

Hummm....I'm perplexed.

As I recall, the Value Line was the first equity futures contract in early
82, the S&P followed later that year.  So how were these "70s" futures cash
tests done???

NCC


-----Original Message-----
From: Val Clancy <valclancy@xxxxxxxxxxxxx>
To: Clint Chastain <flag@xxxxxxxxxxxx>
Cc: Omega-List <omega-list@xxxxxxxxxx>
Date: Saturday, January 30, 1999 11:50 AM
Subject: Re: cash ,,,,


>There were studies done in 70s, 80s, 90s,
>on what leads what, cash or futures.
>The result always was that futures lead cash.
>In the 70s it was up to 45 min, in 80s up to
>15 min and in 90s up to max of 5 min ( ave of about 1 min ).
>
>And of course the most important consideration is that futures
>markets were designed to serve  two primary purposes, one of
>which is widely known and the other one is not.
>The first purpose is a hedging mechanism ( with speculation as the other
side of it ).
>The second purpose is to control the cash  market. Two of those are
actually
>the same coin, different sides. Having high leverage and low margin cost
>it is easy to control cash market with futures. You want to induce supply/
>selling in the cash, you start selling SPs... and the other way around.
>The large contract value and the make/take delivery mechanisms gave futures
the
>necessary weight to accomplish that.
>Arbitrage is a side product of any dual market futures, cash or both.
>
>Overall the cash market ( investment pool ) was designed for one purpose:
>to prevent hoarding of paper money by labor force and to suck that money
>back into the system for it to work more efficiently, preventing outflow of
>money from the system. Profit making by speculating in stocks or futures
>or investing ( same thing ) is not the main purpose. The market/money pool
is a zero
>sum game ( including stocks ) and that proves the point.
>Whoever thinks that  the market is a free market or that everything just
>evolved by itself is a very naive human.
>
>
>Clint Chastain wrote:
>
>> I had always assumed that cash prices followed futures prices, although I
>> don't actively follow the futures. Seems to me that the futures would be
the
>> most efficient and rapid vehicle available with which to allow the pros
to
>> express a change in sentiment. If that is accepted as fact, then stock
>> prices would have to quickly follow futures prices or else there would be
>> free money - arbitrage profits - left on the table. And of course that
>> doesn't happen.
>>
>> Could it be that variations in individual user reception circumstances
are
>> at the root of the wide variance in user perceptions of which index leads
>> which? For example:
>>
>> cable vs. modem vs. satellite vs. fm
>> fast computer vs. slow computer
>> good eyesight vs. poor eyesight
>> good weather vs. bad weather
>> near of far from exchange
>> squirrel chewing on the cable insulation on the roof of data vendor A's
>> building vs. no squirrel on data vendor B's building.
>>
>> I myself dunno, just trying to understand.
>>
>> Clint
>>
>> -----Original Message-----
>> From: Allan Havemose <havemose@xxxxxxxxxxxxx>
>> To: Omega-List <omega-list@xxxxxxxxxx>
>> Date: Friday, January 29, 1999 9:24 AM
>> Subject: Re: cash ,,,,
>>
>> >In my experience, the most significant "feature" of SPX is that it is
not
>> >manipulated by the locals at the CME. I have found it worth the minute
of
>> >two it takes to confirm an SP move with an SPX move.
>> >
>