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Surely avoiding a loss is pretty important to the bottom line....!!
I don't understand your argument. If a borrower pays interest on a loan is
he a loser or is he receiving a benefit for the interest paid?
To make a trade one has to find a party prepared to take the other side.
Liquidity determines how easy this can be achieved and will also effect the
bid/offer spread. Anyone who trades more than one market is effectively
trading a spread.
If you don't set targets and stops when you enter a trade you don't deserve
to win.<g>
IMHO
RP
-----Original Message-----
From: TheGonch <Daniel.Goncharoff@xxxxxxxxxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: 04 October 1998 20:28
Subject: Re: Long Term Capital Management
>Sorry, I just don't get it...
>
>When the stock market drops, everybody holding the stock issued by the
>company loses. There are no winners. The ones who 'sold at the top'
>don't win, they just avoid losing.
>
>Same thing with bonds issued by the Italian government.
>
>The hedge between Italian bonds and US treasuries is more complicated.
>The Treasury short does require a counterparty, so for that PART of the
>trade there is a 'winner'. Hopwever, since it is only part of the trade,
>LTCM could have been the winner on that part of the trade, and still be
>a net loser on the arbitrage.
>
>Regards
>Dan Goncharoff
>
>Richard Parsons wrote:
>>
>> Dan, the way I see it is this:
>>
>> The number of shares in a company/index does not change significantly
>> (discounting share splits and share options), OK; the share price/index
>> value does change. For every buyer there has to be a seller, right.
>>
>> >If the stock market drops, who wins??
>> >
>>
>> Those who sold at the top.<g>
>>
>> >Similarly, if Italian interest rates go up relative to US interest
>> >rates, who wins?
>>
>> Wouldn't this be the banks and money lenders who use variable interest
>> rates?
>>
>> The real problem is when the wealthy people who put these trades on fail
to
>> pay out when they lose. Hence Greenspan's attempt to persuade LTCM to
honour
>> its commitments.
>>
>> RPP
>>
>> -----Original Message-----
>> From: TheGonch <Daniel.Goncharoff@xxxxxxxxxxxxxxxxxxxx>
>> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>> Date: 03 October 1998 11:53
>> Subject: Re: Long Term Capital Management
>>
>> >Richard Parsons wrote:
>> >>
>> >> Forgive me if I'm missing something here but isn't one traders loss
>> >> another's gain?
>> >>
>> >I am no expert, but a couple of thoughts come to mind quickly:
>> >
>> >If the stock market drops, who wins??
>> >
>> >Similarly, if Italian interest rates go up relative to US interest
>> >rates, who wins?
>> >
>> >It seems to me that both a falling stock market and rising interest
>> >rates both eliminate wealth. Together they can eliminate a lot of
>> >wealth.
>> >
>> >JMO
>> >
>> >Dan Goncharoff
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