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lazar223@xxxxxxxxxxx wrote:
Two things:
1. there is no such thing as " the market". There are a lot of markets
with a
lot of different players in all of those markets.
2. money is as fungible as energy. it cannot be destroyed, only converted.
Statement number one appears to be correct based
upon definition. Statement number two is not correct. Money
is created and destroyed every day. All one has to do is look at
the money supply figures to see that. The government increases and
decreases the amount of money in circulation to accomplish various goals
that it might have. These goals very seldom occur for the benefit
of the public, but the public sources that understand what is happening
can take advantage of this phenomena. As more money is pumped
into the system it seeks a haven. That haven in the end is usually
the stock market. As this increased supply of money starts to work
it reduces interest rates, stimulates investment in business and real estate,
and produces a rise in the prices of the various markets of stocks.
Those firms that specialize in the sale of these various products then
have a basis to sell product to a consumer. Stocks are a product,
just like any other. It is advertised, hyped, and sold to the public
just like snake oil was in the old west. The only difference between
the tobacco companies, the drug companies, the food companies and the brokerage
firms is that there is no warning label on the stocks that are hyped.
You receive a bunch of papers when you open an account and I doubt that
1 in 100 read them thoroughly and understand that they are at risk.
There is no warning of the side effects, only the get rich quick, be a
millionaire at retirement, drive that Ferrari and vacation in Europe or
have that home on Costa del Sol. When a broker calls it is never
to tell you to sell a stock unless he has another one to put you in.
He is a salesman and that is how he makes his living. Now with the
electronic markets they try to make you believe that even a little boy
can own his own helicopter and be zillionaire if he invests in the stock
market. Because you were a successful lawyer, doctor, engineer
or businessman doesn't mean that you can be or will be a successful investor
or trader. There are certain characteristics that are required
to be successful in any business and they are not the same for every business
or profession. Those characteristics that are necessary to be a successful
trader are unique. The understanding that trading is a business not
a get rich quick scheme is primary. The understanding that
there are firms out there that put stocks in play, just like there are
firms out there that put products in play. You have CNBC which is
the biggest infomercial for the stock market, you also have Wall
Street week in Review and dozens of other shows concerning the market.
They even post the markets results on the various news programs.
Unlike Ronco who pays for his time to sell his dehydrator or roaster, there
are sponsors that pay for stock and futures infomercials because they have
a business interest in getting you to invest in the stock market and futures
markets. There are trillions of dollars right now in money market
funds, CDs and bonds. Don't think for a minute that the brokerage
firms and mutual funds are not looking at those funds and drooling at the
thought of those funds once again entering the market. Right now
all the prep work is being done. The companies are writing
off everything that they possibly can this year. The prognosticators
and gurus are lowering earnings as fast as they can. The layoffs
are coming as fast as they can. The cost of doing business in this
year of the bear is going way up and profits will suffer the most because
of the sins of the past. Soon earnings will be better then
projected, growth prospects will increase, inventories will be depleted
and new industries will be brought to the forefront. Will it be rebirth
of telecom? Will this adminstrations upgrade of the military bring
the defense contractors into favor? How about a new biotch discovery?
The powers that produce the hype will produce the next great investment
idea. This giant reduction in the wealth effect is never the fault
of the investor or the snake oil salesmen that put them in the market and
forgot to get them out. It has to be Greenspans fault, W's fault
for saying the economy is bad, congress's fault, or someone else's fault.
It is never their own greed. In this bear market millions were
made by those who shorted the techs, went long energy and HMO sectors,
sold their stock a year ago and went into money market funds.
Don't be so quick to lay blame, because it is those very people that hype
these products that provide the volatility that we traders need to make
a living. If you compare the percentage of traders that are
successful with the percentage of restaurants that are successful, or the
number of contractors that are successful, or any other entrepreneurial
endeavor, I believe that the percentages will about the same. The
stock market, IPOs, merger and acquisitions, are all governed by market
forces. These forces are stimulated and massaged by some of the best
promoters that know exactly which buttons to press to get the publics money
into the market. It is a knowledge of what is happening in
the markets and how they work that allows one to be successful. It
is an understanding of both the fundamentals and technicals that drive
the markets that allow someone to be successful in the markets. Ones
worst enemies are greed, fear, and a lack of understanding of ones self.
Have a prosperous week. Ira.
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