I find experts in many fields that I participate in life. The medical field, transportation industry, the food industry. These experts I trust because they have had consistent success in their particular line of work for many years. In the investment arena, however, there is a proliferation of stock market experts who are very unsuccessful. They may beat the S7\& P 500 one year and fail in their attempts for the next 10 years. It's all quantitative now. Its all about the beloved algorithms that have replaced humans in the stock market. Humans have to put together those algorithms and the software programs that run the trading platforms but the trading firms that hold the securities from which these algorithms are based continue to laugh all the way to the bank.
If an investor could afford to buy all of the stock outstanding in Apple Computer what would he do with it? Nothing..... unless he had buyers for that stock. To me, initially there is a demand for Apple Computer stock given the media hyping its products and the demand for Apple's products. This creates the demand for Apple stock because people want to make money since Apple is selling so much product. The investor who owns all of Apple's stock realizes this and sells it to investors at , say, $100 per share. The investor in Apple seeing such demand for Apple stock keeps raising the asking price until he has no more shares left. The price of Apple stock is, say, $300. This is a great return for those investors who bought at 100 or 200 or even 250. Obviously, other people who bought are selling too but for simplicity sake everybody holds the stock.
The investor realizing he wants to keep his monopoly of holding the outstanding shares in Apple, was shorting Apple stock at the highs as he was running out of shares. Why/ He needs those shares back and needs those investor= who bought from him to sell Apple shares back to him. How does that happen? He lowers the price dramatically after the close in the market on any excuse he can find... analysts projections not meeting expectations, sales softer than anticipated, economic climate not as bright...anything. Peeole who bought Apple realize at the open of trading after such gloomy information is disseminated that their shares have lost maybe 20 % or more in value and start to panic and sell their shares throughout the day. For every seller there has to be a buyer and that investor who monopolizes Apple stock is more than happy to buy those shares thereby covering his short sales.
This scenario, I believe, and not vin this simplistic sense, continuously occurs in the stock market and is blown off by the media.by some excuse that keeps investors happy.
So you quantitative and fundamental analyst out there, have fun number crunching. The only numbers that mean anything to me are the black numbers in my investment account.
