This is a stock market blog about portfolio management,foreign stocks, exchange traded funds and the occasional musing about my wildland firefighting experiences. The point here is to share process.
I think you have something there with the possibility of a generation believing the market is rigged.I am seeing more people in more online communities calling the market a ponzi scheme, rigged, or impossible for the little man to make it.They are an extreme version of sell low, buy high as they probably won't change their mind until an incredible decade.
The S&P is UP 0.5% this year.Why all the sky is falling talk?This bull is taking a scary breather - so whatSEG
Thank you, Roger. I respect Mr. Salmon, but this line of thinking is just plain wrong-headed. I think your observations should be even more pointed.
There was a time several decades back when a trader spoke of "making a teenie". Meaning picking up 1/16 on a trade. Today a trader can work out to 4 or 5 decimal points. In doing so, a trader ie,a HFT, can put on a trade of 100 million and be okay to make a hundred bucks. Not a very good arena for the little guy to play in.Also, decades ago, there was a specialist who would always take the other side of the trade (if he had to to maintain order and liquidity). Today, the other side of the trade is the little guy and he doesn't really have a chance.So Roger, refute this statement:"Today, the market is rigged against the little guy and he doesn't have a chance."Not to say a guy can't or shouldn't have a "set it and forget it" portfolio. Just saying, a trader doesn't have a chance and is only gambling with odds worse than Las Vegas.
specialists is a term that pertains to the NYSE. The NYSE did not trade in sixteenths until well into the 1990s not several decades ago.Specialists have always had to deal with the perception of trading ahead of the little guy because the could see the order flow. The manner in which it is supposedly rigged is now different...maybe, but you are framing the entire thing incorrectly if you believe the perception used to be it was fair. The same type of people who think it is rigged now thought so then.
I am not Roger, but to the question of markets being rigged, I submit that a review of the history of markets, from salt currency in Roman times through the first known loan to a valid State by the DeMedici's (it was the Vatican) to the rampant booms and busts manuevered by folks such as Cornelius Vanderbilt to punish or destroy enemies and competitors to the present, manipulation was part of the market. It was probably accepted as a cost of increasing business and personal wealth until recent times. With few if any regulations, I suspect that these type investors were much more sensitive to risk as no one covered their a**.The difference today is that markets are not just the domain of the well-heeled. Money managers, pension funds down the money train to individual investors have so much so-called information thrown at them that they feel compelled to think they are bright bulbs if they just implement their best laid investment strategy. We hear of those touting success, but rarely hear of the portfolio flops unless they are Madoff-sized.And most of us know what happens to so many best laid investment plans. Now, here (again) comes our Feds, with new "protections" for the investor. Great. Investors trying to outgame the regulations to make a quick profit will frequently find a way around the regulations. Other investors playing by the government rules will feel too safe, and still invest in products thay know little if anything about.This is already long-winded, but regulating our markets, let alone worldwide markets, is similar to regulating human nature. If anyone believes that this can be done by the brilliant minds inside the beltway, I wish them luck. T
Anon 6:53. I need to plan for retirement for a time when I am unable and/or unwilling to work to pay for bills and to enjoy life. If you have an idea how I can do that in a non rigged market (equities, forex, real estate, bonds, whatever) then let me know.Rigged or not, how successful or not I will be are the unknowns. What is known is that I will age.I also want to question your second paragraph. If a specialist is taking a position then what difference does it make if the opposite side is a specialist vs the little guy who doesn't stand a chance. Its the same position.
Fear is how Wall Street makes money. Convince them that VTI/VEU aren't going to work, and they're going to have to spend more money on other ideas. Even Hussman, who I like and has beaten the market since his fund started, needs to justify his higher fees because his fund only works when VTI does not.Meanwhile, the internet is full of sites like ZeroHedge where there is a firm consensus that the entire world economy will collapse and fall into the sea. This is just how anxiety looks online: it was going on with "Y2K" and it's a feature of internet culture.I personally believe the game is rigged. It's rigged very clearly and will continue to be rigged. The stock market is rigged to keep going *UP* over the long run, and to offer real returns greater than bonds. The "little guy" only has a few advantages that need to be utilized: invest with a long time horizon, diversification, and low costs. With those advantages, the game is rigged in your favor.
Maybe "rigged" is not the correct word to use. The big players in the market, and let's face it, they control the market, could care less about an individual business. Long term investors are being shut out. Stocks are now a commodity and should be traded as such.
I think expecting the equity market premium to come back is similar to expecting the euro to survive. and this is a pretty interesting article on the ramifications for the year because of European policymakers' recent decisions:http://www.goldalert.com/stories/The-End-of-the-Euro
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