Ponzi

Discussion in 'Trading' started by Spectre2007, Nov 12, 2012.

  1. Security A book value = 20

    Current Market Value = 35


    100 Participants

    98 retail = 8 billion in cash (75% static) (25% volatile)
    2 banks = 2 billion in cash (75% volatile) ( 25% static)

    100 participants trade security A, @ 35

    bank (a) buys 1000000 shares
    bank (b) buys 1000000 shares
    98 retail buys 2000000 shares = 20, 408 shares each

    bank (a) buys from bank (b) @ 45 = 1,000,000 shares
    bank (b) 10,000,000 profits
    bank (a) holds 2,000,000 shares @ 45
    bank (b) buys from bank (a) @ 55 = 2,000,000 shares
    bank (a) 20,000,000 profits

    retail buys from bank (b) 2,000,000 shares @ 55
    bank (a) & bank (b) no security exposure to security A
    bank (a) & bank (b) short security A, through shares/options
    security A plummets to 35
    retail has 40,000,000 in losses
    bank (a) & bank (b) 40,000,000 in profits plus 30,000,000 in profits form the trend sales to each other
    bank (a) & bank (b) pay out bonus of 7,000,000 to its top echelon

    retail sits on 110,000,000 - 70,000,000 = 40,000,000 in losses

    rinse & repeat
     
  2. so we know where the 40 mil came from .. (retail).. but where did the 30 mil from trend trading come from..

    ..from thin air.. better then the FED!!

    trick is to change psychology to greed, where offloading isnt a issue.
     
  3. so what happens when you burn the public.. to the point the public stay out of the market.. The market becomes cannabilistic.. they feed off each other instead of working with each other.

    Targets arent retail... its other large pools of cash.. banks/hedge funds..
     
  4. to save the economy retail has to come back into the market..

    sp 500... 1600 ..new highs, inflationary job creation. FED steps in and buys derivative futures. To hedge out insti's have to buy the underlyings..massive thin air money is created, that gets incorporated into security values.
     
  5. so printing money to inflate asset classes.. burns the rest of the world.
     
  6. fx365

    fx365

    "trick is to change psychology to greed, where offloading isnt a issue."

    --A lot of what Jesse Livermore was saying in Reminiscences of a Stock Operator.

    "so what happens when you burn the public.. to the point the public stay out of the market.. The market becomes cannabilistic.. they feed off each other instead of working with each other.
    Targets arent retail... its other large pools of cash.. banks/hedge funds.."

    --Totally agree. Been watching this play out for some time now...

    "to save the economy retail has to come back into the market.. "

    --I believe this to be true.
     
  7. fx365

    fx365

    This is a lot of what Jesse Livermore refers to in "Reminiscences of A Stock Operator"

    he also one of those that said "there is nothing new in Wall Street"
     
  8. Important to coat tail largest players. Otherwise might as well be sheeple. Wallstreet needs to resurrect the golden goose or house of dreams.