Friday, November 21st, 2008...2:31 pm
Know When To Walk Away from the Market ($C)
Two traders discussing the game.
Trader 1: Hey dude, if you haven’t seen this yet, I think you’ll relate to it:
Trader 2: Thank you. I have always known, to some degree or another, that the market is dirty. This article explains the craft in fine detail. Visually, I think it looks like the chart of Citi. Great stuff! Thanks again!
Trader 1: The longer I work in this trade, the more I realize to what extent I entered with idealized (almost romantic) notions of the industry and the market. When you only look at charts and prices, you can tend to conceptualize the whole play. When you really find out what is moving what and why, it can be eye-opening.
I wouldn’t have thought there could be so much hare-brained scheming, so much conniving and deception as what there is. I’ve gone from idealizing the “unknowable workings” of the free market to believing that the best available market structures are those that pit incentive versus incentive and combats greed with greed. I guess in this sense I am definitely no liberal (who thinks we can just get rid of greed by punishing it or regulating it) but no conservative either (who thinks greed is just a lousy name for something essential and good). I take a view of markets now that the founding fathers took of politics: men and women will be men and women. Trying to change their natures will usually result in the worst disasters of all. The best we can do is get them to check and balance one another as much and as often as possible.
Trader 2: The owners of the financial institutions scaled out when their firms went public. The dirty gunners that stepped in to run the show got monthly/quarterly/annual bonuses to stuff into their personal coffers. Right now, the public are left holding the bag, thanks to Uncle Sam’s deal with Wall Street. This is what I’ve deduced:
Uncle Sam gives incentives (taxes deferred) to citizens to put their money in IRA/401k
but limits the instruments to ”Wall Street Only” issues
and then extends exclusive management to Wall Street by virtue of paid off Regulators.
