I don't know who this guy Hyoooge is, but here is some evidence. According to AMG Data Services (http://www.amgdata.com/), during the entire year of 2005, the inflows to all equity funds were $147.55 billion. On average, it's about $0.58 billion per trading day (147.55 / 252). The combined daily dollar volume of NYSE and NASDAQ along is $70 billion. From here, it follows that the daily dollar volume attributed to all equity funds net inflows is less than 1% of the total daily dollar volume of NYSE and NASDAC.
does this market seem manipulated???
- Thread starter dac8555
- Start date
I don't know who this guy Hyoooge is, but here is some evidence. According to AMG Data Services (http://www.amgdata.com/), during the entire year of 2005, the inflows to all equity funds were $147.55 billion. On average, it's about $0.58 billion per trading day (147.55 / 252). The combined daily dollar volume of NYSE and NASDAQ along is $70 billion. From here, it follows that the daily dollar volume attributed to all equity funds net inflows is less than 1% of the total daily dollar volume of NYSE and NASDAC.
Here is perhaps a better way to estimate the impact of mutual funds on daily market fluctuations. According to http://www.ici.org/factbook/05_fb_sec2.html, the U.S. mutual funds had $8.1 trillion in assets in 2004 (I couldn't find more recent figures). The same site reports the median turnover rates of 65%. That means that the U.S. mutual funds traded about $5.265 trillion in 2004, which averages to about $21 billion a day. The total daily dollar volume of NYSE, NASDAQ, plus just the underlying E-mini futures (ES and NQ) is around $170 billion a day. The ratio is 12%. Granted, it's more than the 3% that I originally cited (I am still looking for that reference), but it still points to the fact that trading by mutual funds doesn't make any significant proportion of the total trading volume. I also didn't include the other markets and futures which would make this ratio even lower.
So, by simple extrapolation, in the case of the 12 points gain that the S&P cash and futures market pulled in the last 1.5 hours on Dec 1st (which is the event in question by the thread starter), only 1.44 points (12% of 12 points) can be attributed to mutual funds buying.
Now, I don't have a PhD in finance, so my figures or the calculation methods may be completely off base. If so, let me know.
So, by simple extrapolation, in the case of the 12 points gain that the S&P cash and futures market pulled in the last 1.5 hours on Dec 1st (which is the event in question by the thread starter), only 1.44 points (12% of 12 points) can be attributed to mutual funds buying.
Now, I don't have a PhD in finance, so my figures or the calculation methods may be completely off base. If so, let me know.
First of all, WHY are people so fond of shorts rather than longs? Shorts are on margin, with a much higher risk. I keep scratching my head every time I see people talk about shorting as if it were an advantage over long positions...
As for dollar weakness being unhealthy for our US markets... I would think the opposite. The reason being that the cheaper our dollar is, the cheaper our COMPANIES are to buy.
Other nationals no longer have to come to the US to live the american dream, they can own it by owning our companies, a bit at a time. At some point, they will own enough stock to have influential voting rights if not outright control.
That's why I don't see the stock market crashing. There are a plethora of factors, but from my perspective, they all point to a stock market rise.
The worse our economy does, the more we sell, the more dips we generate for people who's exchange rates are better to BUY the best the US has to offer at a discount. News of recession would simply make foreign investors rub their hands in glee. We get out, they can get in, how much simpler than that?
And if you think about it, we probably all own some foreign stocks. I have now and at various times owned TSM, LNVGY, BHP, etc. And many people participate in emerging funds or international funds, we can hold their stocks no problem. Why wouldn't they want ours as our dollar makes our stocks dirt cheap to them?
And I didn't read this anywhere, but it would seem obvious to me that when China announced that they wanted to 'diversify' their dollar holdings... what would be the best possible deal? Crash our dollar and buy our companies themselves cheaper because all of a sudden they can buy US corporate stocks for $.80-$.90 on THEIR RMB or Yen or Euro? And buy on dips no less, because we're dumb enough to sell due to 'recession'.
So I'm not dumb enough to sell.
For short term trading with futures (holding period of a day or so), everything else being equal, the risk of holding a short position is about the same as it is of holding a long position. One can even make an argument that being short is less risky, because the stocks tend to fall faster than they rise. If you are a long term investor, it makes perfect sense to always trade long. However, if you are a trader hoping to make a steady income from trading as a profession, there is no chance you can survive with the permanent "long" bias.
That's true, but the dollar has fallen and is continuing to fall. So, if you buy "our companies" cheap now, they may be even cheaper by, say, another 20% a year from now, resulting in a loss on investment made with a non-dollar currency. Example:
You have 1000 euros to invest. At the EUR.USD today of 1.33, you get $1330. Invest this in American company XYZ. One year from now, the EUR.USD rate is 1.60, and XYZ stayed flat. You sell XYZ for $1330, convert back to euros, and get back 831.25 euros. Bad investment.
I see. I guess I don't really understand shorts very well, and never shorted. If I want a hedge down, I just buy puts. It's a fixed loss that way with no surprises. Shorting sounds a lot riskier with no real protection, but I guess intraday, puts don't make much sense.
I'm still learning about the market, tho I have to say that I've been very lucky since 2003
.
I'm still learning about the market, tho I have to say that I've been very lucky since 2003
.Quote from nonlinear5:
That's true, but the dollar has fallen and is continuing to fall. So, if you buy "our companies" cheap now, they may be even cheaper by, say, another 20% a year from now, resulting in a loss on investment made with a non-dollar currency. Example:
You have 1000 euros to invest. At the EUR.USD today of 1.33, you get $1330. Invest this in American company XYZ. One year from now, the EUR.USD rate is 1.60, and XYZ stayed flat. You sell XYZ for $1330, convert back to euros, and get back 831.25 euros. Bad investment.
That's true... IF the dollar continues to fall. However, it's assumption that it 'continues to fall'. The only given is that it is currently falling. Why would you assume it could continue to fall? Other nations wouldn't allow it.
Consider, we are a net debt country with a huge trade imbalance. That means that we fund all those overseas factories and imports, and keep a lot of economies and nations churning along. If the dollar falls too far, it would be cheaper to hire domestically, which would mean the layoff and firing of a whole segment of those dependent economies. It would be cheaper to invest in our own manufacturing infrastructure than use theirs. In other words, our fall would be their destruction.
THAT's why the Chinese keep financing our debts. That's why our government doesn't really want them to and fought for 2 years hard to allow the dollar to sink against the RMB, which it's now finally doing.
But it would mean a worldwide recession requiring decades to fix if it happens too fast and too far. So the dollar falls... the Chinese and Europeans buy our companies cheap, and they prop it back up before their own economies get trashed and when the US start clammoring yet again for better domestic leadership.
I'm not a stock expert, and still learning, but I'm a poly sci person. That's how it looks to me using that analysis perspective. I probably exaggerated earlier when I said that they could buy for .80 to .90 on the dollar, that's an uneducated guess.
But there is a huge huge price to pay for every single nation on planet earth to allow the US dollar to fall very far... so while it's falling and will fall more, there is a point at which no one will allow it to keep falling, whatever it takes. I don't know where that point is, but I suspect it's not very far down.
Add that to the fact that we are all expecting a recession and bad news, it seems the market manipulators like to bank on making the most money on sentiment, so given the current bleak seeming economic outlook, it makes sense that the market will go up to feed on those bears expecting the worst.
That plus the reasons I gave before about housing being a horrible investment now and there being no place to put money since bonds stink and gold is pure speculation. Dividends on some stocks definitely look better than either. Where else do you invest now? Not to mention all the americans with their $4-$8K annual IRAs they have to put somewhere before April 15.
I don't know how 2007 will be, but I would, from my current perspective, be more inclined to bet on repeating 1999 or even 2000 than 2001 or 2002.
Actually, whitless is clueless. In the pits as far back as I remember (more than a couple decades) customer paper was only a fraction of what local activity was -- and with electronic trading the amount of short term activity has only increased vs. long-term. Also consider that a lot of activity is arbitrage linked (direction neutral) which further reduces the proportion of directional long-term speculative activity.
"But there is a huge huge price to pay for every single nation on planet earth to allow the US dollar to fall very far... so while it's falling and will fall more, there is a point at which no one will allow it to keep falling, whatever it takes. I don't know where that point is, but I suspect it's not very far down."
This reminds me of the oil price behaviour this year. Much the same as there is a huge huge price to pay for every single nation on planet earth to allow the price of oil to rise very far...
This reminds me of the oil price behaviour this year. Much the same as there is a huge huge price to pay for every single nation on planet earth to allow the price of oil to rise very far...
But for those countries whose currencies are rising against the dollar certainly the pain of the oil price increase is less than in the U.S. . . .
For example, in euro terms the price of a barrel of crude now is about where it was in 2000 whereas in USD terms it is nearly 50% more than the price in 2000.