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I was sure someone smarter than I would post the authoritative answer.
This is a great mystery and certainly not a silly question. I'll give it a
try.
It is true that every share bought is matched by a share sold. This is very
different from the oft quoted conclusion that for every buyer there must be
a seller. Fifty buyers may be matched by a single seller, or vice versa.
Perhaps the clearest example occurs at high volume turning points where a
relatively few smart players accommodate the buying or selling frenzy of the
masses.
The market has many participants including: true insiders who consistently
buy wholesale and sell retail; professionals who are proficient at reading
the signs and manage to accumulate inventory from the public at relatively
lower levels and distribute it back to the public at relatively higher
levels; facilitators who try to pick quick profits out of the ebb and flow
of price movement; and, retail players (the public) who typically buy high
and sell low over the longer term.
In selling panics, the buyers of last resort are the market insiders
followed by the professionals. In buying panics, the sellers of last resort
are the market insiders followed by the professionals.
Money does indeed flow into and out of markets. Capital is transferred from
cash to bonds to equities to real estate to collectibles etc. These flows
have been studied and interpreted extensively by others.
While common wisdom is that the flow of capital drives prices, some analysts
believe prices drive the flow of capital. This makes sense considering the
source of capital from which the other players make a living is the public.
I hate to sound so cynical, maybe someone has a more upbeat explanation.
-----Original Message-----
From: Don Ewers [mailto:dbewers@xxxxxxxxxxxxx]
Sent: Thursday, March 29, 2001 3:55 PM
To: Real Traders
Subject: Fw: [RT] Buyers/Sellers/Money market
I never heard any replies to this question . . . which means, no one knows
the answer, no one cares, or it was so obvious it was not worth answering,
anyone . . . care to try answer it??
don ewers
----- Original Message -----
From: "Don Ewers" <dbewers@xxxxxxxxxxxxx>
To: "Real Traders" <realtraders@xxxxxxxxxxxxxxx>
Sent: Sunday, March 18, 2001 6:33 PM
Subject: [RT] Buyers/Sellers/Money market
> This is most likely a way too silly question, but if for every seller of a
> stock there needs to be a buyer, how does money net sum "move into money
> market". Is it net new cash that is moving in? I understand how an
> individual or institutions for that matter move from equities into money
> market but doesn't that mean someone else bought what the equities the
other
> got rid of and increased their exposure? Someone has to own what someone
> else sold don't they (ignoring company buybacks)?
>
> Also if we are witnessing what people call "a buyers strike", that I
> understand somewhat. What buyers are there are at the bid or under and not
> at the ask but they are still buyers or no trade would occur? Is there
> anything that measures when the strike is over?
>
> Ira you probably have something profound to say about all this? What am I
> missing here in general??
>
> don ewers
>
>
>
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>
>
>
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>
>
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