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Has The Simple Retail Investor Become Smarter Than Sophisticated QIBs?
There was a time when retail investors were mocked and derided by all: after all whenever the big boys needed to unload they jest blew the whistle, and like obedient lap dogs retail would buy at the very peak of the market because "stocks are a once in a lifetime buy", leading to what some call distribution, and others, a plunge. Not any more. In spite of the recent 20% surge in stocks, following a pattern absolutely identical to the one from September 2010 to March 2011, for the entire 32 week duration of the artificial central bank induced rally beginning October 5, there were a total of 3 weeks of inflows into the market, totaling a whopping $2.8 billion. The outflows: 29 weeks for a total of $96.6 billion, with $2.4 billion pulled out in the most recent week. And as speculated that in the absence of the traditional greater fool (that would be you dear reader hidden behind your E-Trade platform) stepping in, the prop desks, prime brokers, and hedge funds had no other choice... but to sell to each other, in the process exposing sophisticated 'Qualified Institutional Buyers' as nothing more than glorified, stock-peddling Pied Pipers who are good at only one thing: manipulating the less sophisticated crowd. Which works until it doesn't.
Several years years ago, various media organizations tried to starve the banks by telling their followers and readers to pull their money from the banks. They failed. This time around, nobody is forcing Joe Sixpack investor to pull his money out of the stock market - he is doing it on his own, having realized the true nature of the rigged casino. And in the process may be inflicting a more crushing blow to the banks than withdrawing a few billion in checking accounts ever could.
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its called 1937
But I take investing advice from a talking baby -- what could go wrong with that plan?!
ROTFL!!!...stock markets need The Bernanke Binky!
Bullish for equities, there is no other reasonable interpretation that doesn't involve completely suspending disbelief.
and where oh where did our little retail investors go?
I went for sushi the other night, in addition to the usual the guy started offering me something but I could not understand WTF he was saying? Thought it involved glow in the dark tuna from fukashima or something,
then out of nowhere a hand reaches over my shoulders with a plate full of rolls and stuff,
and guy says eat special roll-go real physical-I look down and I'll be damned if it wasn't a silver filled sushi roll.
"and where oh where did our little retail investors go?"
lol...not to the long side slaughter house.
Hannibal: And what did you see, Clarice? What did you see?
Clarice: Lambs... And they were screaming.
Hannibal: They were slaughtering the spring lambs? And they were screaming. And you ran away?
Clarice: No. First I tried to free them. I opened the gate to their pen, but they wouldn't run. They just stood there, confused. They wouldn't run.
Hannibal: But you could, and you did, didn't you?
Clarice: Yes. I took one lamb, and I ran away as fast as I could.
Hannibal: Where were you going, Clarice?
Clarice: I don't know. I didn't have any food, any water, and it was very cold, very cold. I thought if I could save just one, but... He was so heavy. He was so heavy. I didn't get more than a few miles when the sheriff's car picked me up. The rancher was so angry, he sent me to live at the Lutheran orphanage in Bozeman. I never saw the ranch again.
Hannibal: What became of your lamb, Clarice?
Clarice: They killed him.
Don't you remember the Talking Baby Bought Stocks and then threw up. That is what happened to many time with Retail. They Bought Stocks and they went down immediatly.
>>"Has the retail investor become smarter than sophisticated QIBs?"<<
This is really an interesting topic for discussion. As I know many engaged Wall Streeters read ZH but don't comment, I won't say more than what is already known. With the fundamental Wall St rule of the "greater fool" (aka "bigger sucker") no longer functioning, Wall St has to cannibalize the weakest firms. Its a zero sum game. The retail sucker provided over a century of "input" into the loaded dice game... now the retail sucker has wised up and is no longer playing so uncle BEnron comes to the rescue to provide "input."
GAME OVER
Holy Crap. Look at the this rolling stone article on naked short selling and how the "muppets" are treated.
The lawyers f..ed up and released important information.
For those who enjoy the article... make sure you read the court documents attached at the bottom.
http://www.rollingstone.com/politics/blogs/taibblog/accidentally-release...
they didn't earn the nickname 'vampire squid' for nothing ...
That sounds like something Thomas Magnum would say.
Damn you sir. You just reminded me how much I want to move to Hawaii, drive around in a 308 GTS and seduce a parade of hot women.
Well, at least I can grow a mustache...
You can buy the cool shorts at Costco.
"Several years years ago, various media organization tried to starve the banks by pulling their money from the banks."
What is this about?
You can downgrade me if you want. I still have no idea what he's talking about. What media organizations tried to starve the banks? I never heard anything about this. Apparently giving me more info on this subject was harder than downrating me like an asshole.
Can someone with a knowledge of economics explain me how market can levitate higher at the time when funds are pulled out of it?
Let me preface this by saying i only have a Lehman's understanding of finance, all of which has been learned from this blog.
It is my understanding that their are two types of equity funds, domestic and international. If the domestic retail investors are leaving, than the international big banks are the ones buying. Therefore when, not if, the markets tumble those same big banks who are buying are going to be shit out of luck when their paper contracts are worth nothing.
Please correct me if I'm wrong
Thanks!
LOL @ Lehman's understanding. Those guys were the smartest guys in the room!
Lol, fuck me. I've been hanging around here too long. I meant to say LAYMAN.
You had it right the first time. Even if by accident, that was a great turn of phrase.
It's the Greeks! Gyros to the slaughter....
I'm not saavy either but it seems to me when you have mega computers trading shares around in seconds between themselves it's fairly easy for the owners of such computers to drive prices higher without the involvement of retail investors. They just need other investors to buy at the inflated prices to end up holding the bag. But I don't know much.
Edit: Let's add to that zero percent cost loans to the primary firms operating these computers. So what you are seeing is increased prices based not on capital or fundamentals but on credit, or leverage from the banks that get free credit who directly or indirectly operate the computers that inflate prices.
The data on % trades generated by HFTs supports your thesis, though BlueCollar above may be onto why until recently we saw post-European market close dip-buying -- they punish their markets then invest the proceeds here (?).
Once the majority of Joe Public is out, it will be interesting to watch the computers operate -- like a tennis ball machine with no partner, spitting out yellow balls ceaslessly, increasing the frequency (and ferocity) when none get returned (THWACK! THWAAACKK ! . . . )
from my small vantage point it appears that the QIB's are playing a game of exaggerated expectations promoted to the Marks and minimal actual results - when you look at the report from the hedge funds with JCP positions and the lead guy gets hammered for 100's of millions and then clendendon is playing his personal book against the company book of trades and piggy backing besides and still loses money and then chase trying to carve out a marginal profit on huge bet - and all these guys at this investment show in Lincoln center where only chanos made serious % return last year recommendation - there must be little left lying around for retail - markets must be pretty efficient these days - why would ANY retail ever exist again?
The fewer people in the market, the less money it takes to move it up (or down). This is why you can see massive swings after hours or on days with almost no volume. The Fed loves this - this is why you see "magic futures" almost every night.
In a normal market - it's stairs up, elevator down. In a centrally planned market, it elevator up and stairs down. Right now they are "walking" the market down in a controlled manner and when commodities and stocks are low enough...QE.
Just my opinion of course.
Stock buy-back from companies flush with cash can also raise the stock prices.
The bots were buying.
The main redemption values I'm interested in seeing are the index tracking annuities, which have become wildly popular in the last decade with boomers and older people. They have fine print up the butt, so withdrawals are discouraged with penalties and pepper spray.
Tyler, any data on those?
Those annuities are trying not to blow gaskets in the derivitives markets trying to hedge interest rate risk while paying out benefits that they promised 5 years ago. I would guess there are very few redemptions in those markets. If anything people are using those vehicles to take more risk than usual in the markets due to the guarantees.
that giant sucking sound you hear is the sound of dumping the wall street asshats...
If Warren Buffett craps his pants and no one is there to hear it, does it make a sound?
Try as I might to give a shit,
...who cares?
reminds me of the tee shirt advertised on this page ...
I USED TO CARE
now i just take a pill for that
c'mon he craps his pants, he just calls Becky Quick to wipe his ass and massage his prostate. That girl must be into old men shit.
would you like your salad tossed, sir?
What is the sound of one butt-cheek flapping?
It will in fact make a sound,but W.B. will assure us all it's the sound of an endangered song bird that the gov. requires more taxes to save!!!
Zimbabwe Ben is going to anally rape anyone holding cash and bonds.
I'll take my chances with stocks and gold.
I'm going to hold on to our bonds until fall, then figure out something else. Silver for the long haul.
Even Fall might be a bit long in this climate. If things go sideways it could happen whiplash inducingly quick.
I'm long chickens, gardens, and foraging. I learned to make soap from fat americans, so I can survive off the land as long as I need to. Americans will never forage, it involves green vegetables and execise.
Biderman & Nenner made the most sense to me in regard to this and I ended up agreeing with them. I'm using money trapped in a 401K. I sold out of the stocks a couple weeks ago and went into DIPSX (TIPS) & PTTRX (Bill Gross). Will be keeping an eye on the news to see if Fall is too long to hold before jumping to the next raft.
That was well said. I'd also take my chances with leveraged ETFs and silver.
Ponzi.
The usa is a totalitarian state. You will be buying stocks whether you like it or not.
in the words of one very famous Admiral resembling a squid,
IT'S A TRAP~!~
Probably not much time left to get positioned for freefall.
Not looking good at all.
Started picking up Ag when we hit 27.30 or so and will probably continue all the way down to wherever it finally bottoms.
I haven't the skill to time a market like this perfectly so it seemed like a decent price point to get my feet wet.
Just waiting till they unload the Flopbook IPO.
Next Tuesday ,I think will be the day.
Tick tock
The individual investor isn't smarter. The individual investor is more skeptical about the nonsense that gets pumped out by the media.
Getting live stock info costs $30 per month. Delayed feeds can sometimes be free. Love the internet - the great equalizer.
And the OPM traders always have to perform whereas the individual trader can recoup and take a day or two off.
Well, some of us ain't dumb, but it takes a lot of work to be smart all the time. I put in 10-12 hours a day (including some here at ZH) "doing homework".
I'm finding it easier and easier to make money, actually, as a trader - I swing trade, trying to be on a little different timeframe than the day traders or the investors. Those big-bank "hookers and blow fucks" aren't really good traders (as JPM just proved, once again).
Like Mitt - they were born on third and think they hit a triple. Bullshit. They used to make money, as the article says, by manipulating the rest of us, or the markets as a whole. Now that we pesky kids on the internet are watching - they can't get away with that as much, and what they do to manipulate the markets is obvious as hell in even just one second resolution level II data anyway - and you can just piggyback for the ride and catch the middles of the moves they create. It's working for me at any rate. No need for Nanex for what I do, though it's interesting. Since I can't trade fractional pennies, I go for a little bigger moves anyway.
But I'm in, out, long, short, out - whatever. No net in or outflow from me over other than short timeframes. The ticker is the truth, I don't care much about macro ( for me it's just a way to keep boredom at bay), fake paper gold, and so on - I've got a great chance of being out or short already if TSHTF anyway. That's because when the insiders sell - it moves the tape, I'm watching and making my move too - they're breaking a law, I'm just following the ticker and looking for those moves that presage the big ones when the news does come out legally.
It's the one huge advantage we mere millionaires have here - were I 100% long - unless I was long stupid in some low liquidity penny stock - I can sell the entire mess in a couple mouse clicks and make the tiniest bump in any of the prices.
I did that once just to see it - and yes, I made about a 30 second blip in an index of about .01% that was "All me". Cool but stupid. Fun once.
A big fund can't do that - they have to move slow or they run up the price when buying, or depress it when selling, especially these days with low volumes in everything. So all you have to do is dodge the whales, or be that little fish that eats the parasites. What it takes them weeks to do, like unwind a big trade, I can do in milliseconds without moving anything much at all.
With things this fucked up, and with the internet - we actually have some advantages if we don't let our political agenda blind us to just plain good trading skills. Don't fall for "what's gotta happen in the future" as a guide to this week's trades. It's stupid. We all know how it ends, but no one knows when. Till then, motion is money, just stay on the right side of the motion and all is well.
Like Mitt - they were born on third and think they hit a triple.
I think I may have pee'd myself. Mitt for brains...Love it!
Alot of this money is going into Indexed Annuities and Indexed Life insurance. I need someone like Tyler Or Reggie to take a look at this stuff because these people will get creamed when (if) rates rise.
Timmay these companies have all different products. Some of them supposedly have them indexed to rising rates and therefore they will be okay. I think where they start to implode is if the markets tank and rates don't rise. They have income guarantees that they have to pay out based on all sorts of ridiculous assumptions. If the account balances dwindle down and the clients live a long time they will be paying out a lot of money based off promises they made when rates were higher. Most of these clients already lost their ass in 2008 and so between fees and distributions there ain't much there anyway.
That being said I know they have all sorts of hedging strategies. A few of them got trounced a few months ago when rates jumped. From what I understand volatility will be the thing that takes them down. The higher the volatility the harder it is for them to hedge risk
Hahaha, thats what you should tell anyone tries to sell you annuities. Just ask about the commissions.
Just smile & wave boy's...smile & wave ;-)
FWIW, I have had a significant amount out since June of 08 (I waited for the market to recover a bit after bear sterns, but bear is all I needed to see) Until the fraud and corruption is cleaned up and they quit front running everything I do, I'll stay out.
Fuck em and fuck em good...
Yep.
When Corzine goes to jail - federal pound him in the ass jail - I'll know it's okay to get back in. Until then, there's been a he'll of a sale on silver and gold is just as attractive. Lead never goes out of style and my pantry is stocked for a couple months worth of food.
Feel free to crash-QE-crash the market Benny and the Centrally Planned Ink Jets! And feel free to get fucked!
Pardon me, I'm just a stupid bird, but isn't the money coming from thin air? (Quantitive Easing)
The more Bennie and the Ink Jets print, the higher it goes. Woosh!
Fool me once, shame on you. Fool me twice, shame on me.
Retail has been shamed, and is very resentful. They have their "fuk yu" face on.
My quick and dirty look at that chart only shows a significant divergence from about Feb 2012 to present. It's a significant divergence, but retail looks like the usual "chasing the highs" pattern one has come to expect prior to Feb 2012.
Guys check out the following
http://www.guardian.co.uk/global/2012/may/16/cost-greek-exit-euro-emerge...
http://www.dailymail.co.uk/news/article-2145139/Eurozone-debt-crisis-Fea...
http://www.independent.co.uk/news/business/news/vulture-funds-circle-as-...
Pass it on. Its about to get REAL
If the links arent working check Drudge coverage...
Yes, it is about to get very real. Just remember, when people around you are panicking, stay calm and maintain your wits. Have a plan and follow it.
Start with the EXIT signs.
And, get a towel.
Because when I want information on finance I'm going to go to the republican version of TMZ. Fuck Drudge.
The black helos nixed your links.
i was wondering this fine day "if i just started buying treasuries when Paul Volcker took over at the Fed in...was it 79?... and never touched anything other asset class and just kept buying" how would i be doing? How would i be feeling even?
I do not think that anyone has gotten "smarter". The people still believe in right vs left, corporations/politicians are accountable, blah, blah, blah.
But, the evaporation of "trust" is a marvelous thing - difficult to create trust too.
Not that any of these jokers were ever worthy of trust...
Maybe the algos can figure out horse trading between the banks isn't too profitable in the long run.
"rigged casino" if you only new the half of it...it's bad to the bone. the only amazing thing is how long it's taken "the public" to realize something is not quite right. it's about time.
What I hate most is the Upgrades and Downgrades. A Bank can accumulate a large position in Stock and Options and then Upgrade a Stock and reap Millions. Or when they are trying to Buy when the Stockis on the bottom they Downgrade it to get the last people hanging on to Sell to them and then take the Stock up.
I watch for Upgrades and Downgrades. Wait a few days and do the opposite.
Anyone remember all of the Upgrades when Aapl was at the top. There was a new one every day and the price projections got higher and higher. Every Analysis trying to out do the last.
Given the consistent outflows, the Fed-tards and the ESF are determined to scare retail away from gold and silver.
Because once wide-spread J6P sentiment swings towards gold and silver and away from fiat, the psychological conditions necessary to trigger hyperinflation in the dollar will have arrived.
The Fed-tards are desperate to prevent that day from coming. So they dangle the carrot of magical levitating markets, and wield the stick of gold/silver volatility.
TARP and a few other crony programs were hatched in an economic environment like the one we entered this week. Soon the pols will be telling us the next printing will be for the good of the world. I am not sure the populace will buy into it. But if the elites give us each a few crumbs from the printing they will suggest they are not supporting the 1%. But printing of any kind will in fact support the 1% because just like the situation in Greece, we are just a conduit to keep the system chugging along. I for one would like to see a bout of deflation; it will permanently flush a lot of bad debts away and everything from the price of commodities to the cost of labor will start to fall. Cheer the coming deflation... If the Fed will allow it!
Big dinosaurs go extinct.
Retail is broke.
No appetite to gamble in this casino.
Some things are worth buying if you use Biflation as your guide...food, gas & oil (if you can store it), PMs, ammo....
Some things will continue their remorseless creep down into the Abyss....House prices, retail clothes, and Japan...
I agree! That's why I think it's necessary to rely on analytics pricing, especially if you're a business owner, this kind of system will guide you to play smart and this could make all the difference in the world for you.
I try not to Own Stocks. Just rent them. Although, sometimes I get caught and will hold them until they are back in the Money.
The Goal is to not to hold any position over night. Because of Upgrades or Downgrades or Gap up or Gap downs in the morning.