The fed injections only prolong the inevitable, which is disappointing since some of my options will expire next week. But if I can afford to wait and sit on my position, I'll be rewarded because the longer the prolonging of the inevitable, the more severe it will be when it occurs.
Well then my question is if it is not rigged, why did the Federal Reserve come to the markets rescue to keep it from falling more? And why did President Bush not once but twice in as many days try to calm the markets? Why isn't the market allowed to keep falling as it is allowed to keep rising?
And one other thing...Who made up the Fed decision to bail out the market and when did they arrive at the decision to keep the market from falling more? I mean, if they knew what they were about to do, then somebody else had to know what they were about to do and they could have taken positions before the Fed announcement.... Right? or Wrong?
What is all this liquidity stuff anyway? I've heard of a hot beef injection but liquidity, sounds crooked.
Think of the market as a dying man. In attempts to try and save his life, you can put him on life support, do surgery, whatever it takes and it will only prolong the inevitable. When an institution or person obtains great sums of money, it becomes a notion in their head that they can move markets. In one aspect, they do - that much money cannot be tossed around without markets being moved. On the other hand, it can be a power trip with severe limitations and cannot be used to sway public sentiment or the primary trend. Atlas held up the sky on his shoulders, but even he would not be able to hold up the stock market I suggest reading up on Dow theory or Reminiscences.., it will provide a better explanation and further insight. This basic knowledge will help you shed the newbie mentality so you stop asking WHY and instead begin to assess practical implications. EDIT: A more recent example would be Black Wednesday. Read about George Soro's bet against the Bank of England. Even large institutions are not infallible and can make misjudgments on market actions.
"Well then my question is if it is not rigged, why did the Federal Reserve come to the markets rescue to keep it from falling more? And why did President Bush not once but twice in as many days try to calm the markets? Why isn't the market allowed to keep falling as it is allowed to keep rising?" because that is PART of the market. that's not proof the market is rigged. it's merely that the market is the aggregate of ALL trader and investor decisions. did the fed take action? of course. that doesn't make it rigged. if you trade the market, you understand fed actions and statements are PART of the market. the market has many players.
Well said. 100% Agreed. The FED conducts OPEN MARKET operations just about every day. This time, they were simply more aggressive. You need to take a class in Econ. 101A. Educate yourself on the FOMC and open-market operations.
Mr. Market (crackbull) is happy today. He had his redballs. http://youtube.com/watch?v=WxW0dkSUCzk&mode=related&search= Video cliffnote primer for how liquidity injections work.