from: a journalist to: fund managers

Discussion in 'Trading' started by journalist123, Feb 6, 2010.

  1. I don't know if this will work or if this is even proper... but....

    I am a journalist. I am looking for commentary on what drives the direction of the broad U.S. stock market.

    Any fund managers?

    And no technical analysis.

    I will post this a few more times throughout next week.
  2. I don't think this is the answer you're looking for, but here goes, anyways.

    When there are more buyers than sellers, the mkt goes up. When there are more sellers than buyers, the mkt goes down.
  3. well if you came to et for brilliant analysis you might be disappointed. half the conspiricy nuts here think the ppt controls the market.
    if you want a short and sweet answer here it is. SENTIMENT.
  4. Post your picture. It's the only way you'll get replies on ET.
  5. bozwood


    Long term: valuation
  6. markets do not trade on valuation. value is subjective.
  7. spinn


    ok you think the market is up 80% and there were $32 BILLION IN FUND OUTFLOWS LAST YEAR AND THE GOVT WAS NOT INVOLVED.

    ps he has no idea what the ppt is.
  8. maybe you could explain it to him. anyone who has to shout conspiricy in caps must have a clue.
  9. Dear Journalist,

    Market direction is determined by inbalances in buying and selling. This inbalance causes prices to change in a certain direction until a balance is reached between buyers and sellers. During an inbalance the group of participants that is in the minority is able to demand price premiums from the majority. This means that if the majority is offering stocks the minority that's demanding them is able to do so at higher premiums, which in this case means lower prices. It hereby follows that stock markets are a transfer of capital from the majority to the minority in the form of price premiums. Ergo, only a minority profits.

    What drives inbalances is a proces of contracting and expanding leverage. This proces has a feedback loop-like relation to sentiment: negative sentiment causes deleveraging which again causes greater negative sentiment and more deleveraging. Ultimately the use of leverage entails forced liquidation, which is the point at which the greatest price premiums can be extracted from the market place. Forced liquidation can set off a wave of more forced liquidation, causing great discrepancies in valuations from which the minority can profit.

    Journalists usually lack knowledge of the rules by which markets work. This causes them to look for outside causes or rational explanations where there really are none. The way markets behave can only be fully understood by the rules upon which they are based. Ergo, how markets behave can only be understood deductively and it's possible to be understood a priori.
  10. dozu888


    In a perfect world, all journalists should be educated with the above, so they can stop writing financial news everyday with the same format that goes 'wall street went up (down) today because.....'

    then again, the world aint perfect, and we do need the uneducated journalists to keep uneducate the mass so as to keep funneling dumb $ into the pot.
    #10     Feb 6, 2010