Wow....so many things to blog, but I can only choose one for now. I guess the most obvious one would be the stock market and the activities that surround it. So my opinion about the automatic halt for the stock market is a bad idea that came form a bunch of people who really don't know what they are doing. Despite their positions in society or maybe their career resume or even what great school they came from just tells me that there are a small group of people that decide for the majority. It just shows that we have people who do not look out for what is best for the people, but instead their agenda is to a selected group. We think the school they are from or what company they work determine their ability to do the right thing. Something is very lacking in all of this mess is the knowledge and courage to affirm that "we" need to stop become zombies or lemmings of this world. But before going further, I think one thing should be clear, there are investors in the market and there are traders. The investors are gone or pretty much a dying breed that got killed by the idiots that try to put regulations and reforms to the market. They use fear and creation of a enemy to drive their agenda or popularity. They say you are the victim and "they" are the evil one, the wrong doers that take food away from your family's table. So what do I mean by that. To begin, what happened on May 6 was the perfect platform to say we need financial reform. The same reasoning behind why we need bailout and all the stuff that we been fed with. But for one second what if all this is due to the natural market forces, the same market forces that drove the market up. I didn't see anyone mention how we need reform when the market jump 1k point in one week or the unexplained reason why we hit above the 10k mark. So okay I benefit from that improvement in the market as I suffer from the fall of the market too. Funny how the first reaction from people, especially those in the government is to look for an enemy to cast blame. Our administration and his lynch mob were ready.
Now the proposal was to halt trading when stock fall below 10% (originally they propose 20%). They come to an agreement that 10% was where the bar should be placed. So anyone who knows economic principals can tell you that this is not the best instrument for market reform or just not good for the market period. In the long run it actually hurts the free market and counter the concept of what a market is. It is also why this administration or really the finance industry has become a shameful bunch because of what they know and what they don't know. This is not about intelligence, this is about greed. So let say the market drop 10% and the halt takes place. As a trader I've been saved (the pause) to exit my positions before it is too late and give me time to rearrange my trade strategy. While the investor wonder or await what happens next. He doesn't have the tool or insider benefit to know what other people are planning on doing. As a trader his mode is to minimize risk of movement in either direction, while as an investor this halt puts him in a holding pattern because he really do not have the tools to react to the market as the traders. So the next day or 5 minute after, the trading resumes. The investor know that a halt took place, will wonder really was that the bottom or an opportunity to buy. The trader on other hand got all the tools to assess the load or direction of trades that will be coming down the pipe and thus the advantage to the investor. In the meantime the trade will make some money with the increase in volume of trade that needs to take place to ride out the volatility. Buy, sell, hedge, cover, and you can name all the strategy. The investor will wait because he knows about the artificial interference with the free market and overall sentiment are getting low (or nervous) so maybe right now is not the best time to buy, but maybe it is. He waits for more information. While the traders will have their own opinion (opportunity to buy, must sell), generate more trade. All this is happening with millions of people in the market. So who loose out on this? Wonder why the investor always get the short end of the stick? Because those who are in the market tend to be there to invest, while those who handle the money makes more money. The halt did not help fellow "Americans", it help the selected (separated) Americans. There is more to be said. But the above is a simple example. But the activities for the last week since May 6 shows what the huge drop was in fact natural market reaction. Although painful to experience (me included), it is part of being in the market. That halt already been implemented in people's mind and the reaction to the market shows it. All this reaction by the policies to inject artificial growth into the market is why we have this situation. The market been injected with so many foreign substance (policies and creative investment strategies) that we are really working with a less of a real market. This market is like a human being that been on crack. We still call him human (market), but really how much of him is really a functional human (free market). Yes people will say they are too big to fail, they will say well the market went up since what the administrator did. But can it be that all this is the law of free market reacting to the fiscal policies than been injected into the system? Can it be that we been led astray by the promise of change for the greater good to investors (Americans, families, ) but instead been zombified to participate in this casino of traders?
