You know the old saying about Wall Street being crooked.... anyhow, I am taking solace in the fact that this truism still exists.. It's alive and well, and it's giving me hope in the future of Wall Street and the financial future of this country.
Just what do I mean?
Take a look at the volatility recently. It seems to me the huge drops come in the morning, on lighter volume and the reversals are coming in huge volume. This tells me that the small "investors" are getting shaken out while the market makers are shaking the tree, while the big institutions are coming in, buying like mad and driving the prices back up.
When small investors are already skittish it does not take much to shake them out, taking their shares for pennies on the dollar. At this point, small timers are tightening up their stop loss limits, making it very easy for the market makers to make some small volume trades at ridiculously low prices to trip the stops and start a wave of selling.
The value hunters come in after lunch and start snapping up these shares on the cheap, patiently willing to hold until greener pastures surely sprout.
How am I playing this? Index funds. I am not trying to catch a falling knife. No matter how good the stock (sorry, maybe except for a bac (bank of america) bk (bank of new york) JPM (jp morgan) is. Okay, when I see the financil index XLF drop 11% in a day on light volume, I am a buyer. I will come in and snap it up for nothing more than the divident. It is currently 6% and climbing as the price continues to drop.
NEVER TAKE THIS AS PROFESSIONAL ADVICE, DO YOUR OWN RESEARCH.
I look into the index funds a a longer term investment.
Good luck.
Mr. Boo 1031
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